Traditionally, lenders required potential buyers to save 20% for a down payment, but with the help of government programs, many can now get by with just 3.5% down – but “fair” is a subjective term. With a national median home value of around $358,000 at the end of November, the middle buyer would need $12,530 in the bank — plus closing costs — to close the deal.
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The good news is that your state might have a program that can help you meet your minimum down payment requirement or offer another type of financial boost to get you into the home of your dreams.
According to Forbes, home buying assistance programs fall into one of five categories. Grants are the most valuable because they do not require repayment, but there are also Individual Development Accounts (IDAs) or matched savings programs, zero rate repayable second mortgages, deferred payment mortgages at zero interest and low interest secondary mortgages.
All 50 states offer their residents one type of program or another, with many giving homebuyers the choice of several assistance options that might suit their particular situation.
Here’s a look at the programs homeowners can turn to in the five most populous states in the South.
Florida
Sunshine State’s Florida Assist program offers up to $10,000 on FHA, VA, USDA, and conventional loans and deferred second mortgages with no amortization at 0%. Florida Assist is not forgivable and repayment is deferred unless you sell, refinance, transfer, satisfy the first mortgage, or otherwise cease to occupy the property.
There’s also the Florida Homeownership Loan Program (FL HLP), which offers $10,000 and a 3% full amortization second mortgage with a 15-year term. Here too, you must pay in full if you move or refinance.
Finally, there’s the HFA Preferred and HFA Advantage PLUS Second Mortgage, which offers 3%, 4%, or 5% of the total loan amount in a forgivable second mortgage. When used with Florida Housing Preferred Conventional HFA for TBA or HFA Advantage for a TBA first mortgage, it is forgiven at a rate of 20% per year for five years.
Some of the qualifications include that you must have a credit score of at least 640, complete a homebuyer education program, and not earn an income that exceeds your locality’s maximum threshold.
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Georgia
The Georgia Department of Community Affairs (GDCA) Georgia Dream Homeownership Program offers most buyers $7,500 through its standard loan program — all eligible buyers can qualify. Active military personnel, public protectors, educators and healthcare providers can apply for $10,000 through the Protectors, Educators and Nurses (PEN) program.
The CHOICE program offers $10,000 if a household member has a disability.
To qualify for a Georgia Dream loan, you must be a first-time home buyer or a buyer who has not owned a home in three years, although there are exceptions for people buying homes in certain designated areas. Your liquid assets must not exceed the greater of $20,000 or 20% of the purchase price and your income must not exceed the local maximum. You must also meet the mortgage credit requirements for an FHA, USDA-RD, VA, or conventional loan.
North Carolina
The NC Home Advantage Mortgage program offers down payment assistance of up to 3% of the loan for first-time home buyers and those looking to upgrade. The North Carolina Housing Finance Agency, which administers the program, also offers up to $8,000 in down payment assistance for first-time buyers and military veterans only. These two groups may also be eligible to combine the NC Home Advantage Mortgage with the NC Home Advantage Tax Credit. It could save them up to $2,000 a year in federal income tax if they are approved for a mortgage certificate by the NC Housing Finance Agency before buying their home.
You don’t have to repay the assistance you receive unless you sell, transfer or refinance your home within 15 years. The aid is canceled at a rate of 20% per year from the 11th to the 15th year. Applicants must have a credit score of at least 640, cannot earn an income greater than $126,000, and must qualify for an FHA, USDA, VA, or conventional loan.
Texas
The Texas Department of Housing and Community Affairs (TDHCA) administers the Texas Home Ownership Program, which provides both down payment assistance and access to the mortgage tax credit program.
My First Texas Home, which is only open to first-time home buyers, offers a low-interest 30-year mortgage with up to 5% assistance. Homebuyers can save even more when they combine My First Texas Home with the Mortgage Credit Certificate (MCC). MCC, which you can also take as a stand-alone option, is open to first-time buyers and military families and can reduce your federal tax liability dollar-for-dollar.
There’s also the My Choice Texas Home program, which offers low-interest 30-year mortgages and up to 5% assistance to current homeowners.
Virginia
The Virginia Housing Development Authority offers both a down payment grant and a closing cost assistance grant through the Down Payment and Closing Cost Assistance (DPA) program. It is open to first-time home buyers at 80% or less of the area median income (AMI) and offers 10% or 15% of the sale price for homes purchased in DHCD-approved areas, plus up to $2,500 for closing costs.
Borrowers are required to participate in homeownership counseling and complete a HUD-certified homebuyer education course through Neighborworks or VHDA. They must also contribute 1% of the value of the house from their own money.
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This article originally appeared on GOBankingRates.com: Home Buyer Assistance Programs in These 5 Southern States
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