Down Payment

In my last post, I discussed that the MAJORITY of first time home buyers are eligible for DPA here in Colorado. In this post, I am going to talk about what are the qualifications for DPA. You will be surprised how easy it is to qualify and it is not that restrictive in order to get your piece of the DPA pie.

The first factor that has to be considered for DPA is HOUSEHOLD INCOME.  Household income is defined as “everyone” in the household (that will live in the home) that earns an income. That total income has to be counted towards the income limits for that agency’s guidelines. For example, if a parent is going to live with a young couple, then that parent’s income has to be counted in the total income household income calculation. Different agencies/programs have different income limits and depending on which one you use you are subject to the income limitations.

The second factor that you have to consider when analyzing DPA is the GEOGRAPHIC AREA in which you are looking to purchase. There are agencies that lend and cover the entire State of Colorado and others that only cover very specific areas. In many cases there are several options for assistance for the buyer. Understanding this and knowing which is best for the buyer is critical. The last thing you want to do is get stuck with assistance that does not work into your financial goals. You as the buyer should choose only one program over the other just because the lender does not offer both programs. Shop around, find a lender who can do both and provide direction and guidance for the program that best suits your individual needs.

The last factor to consider when evaluating DPA is the TYPE of ASSISTANCE. Is a 2nd mortgage loan or is it an actual Grant from the agency? Assistance where there is a “repayment” of the assistance is becoming a very popular and common.

Grants for assistance are becoming less prevalent and generally have lower income limits that assistance that is repaid. Your Lender should be able to compare and contrast the different options and guide you the best option.

So you think you want to buy a home.  You have a good job and reasonably good credit but you don’t have the 3.5, 5%, or 10% down payment that is required in order to purchase these days.  You’ve heard rumors about different down payment assistance programs (DPA) and how you can get in for as little as $100 or $1000.  Those programs are myths or urban legends correct?  Or those programs are designed to help only the under-served, the homeless, and the people who fall below the median income in this country……right?   THINK AGAIN!

DPA is designed for one thing, to assist buyers in being able to purchase a home with very little money out of pocket.  Are there some income restrictions and geographic restrictions?  There can be but for the majority of first time (and some second time) home buyers in Colorado, DPA is available for the taking.  You simply need to ask and work with a lender that handles these types of programs.  If your lender serves this market, you will find it very easily.

In Part 2 of this series we will talk about the factors that determine the qualifications for down payment assistance and in Part 3 we will talk about the specific agencies and types of assistance available in Colorado and the Denver Metro area.