Down Payment Assistance

The size of the down payment depends on the buyer’s credibility. Buyers with good credit records could pay smaller sums. However, those who pay less than 20 percent are required to purchase Private Mortgage Insurance, for which they are charged 0.5 to 1 percent each year.

Until recently, it was not uncommon for lenders to grant so called zero down payments for borrowers with perfect credit records. However, this is no longer the case, because too many borrowers defaulted, which eventually contributed to a severe mortgage crisis.

FHA down payment assistance is the brightest example of helping less than affluent people purchase real estate. Established in the 1930s and aimed at boosting the battered US economy, the program helped the US estate market and other sectors recover from the consequences of the Great Depression. In 1934, the US government passed the renowned National Housing Act and then founded the Federal Housing Administration (FDA). FDA’s mission was to help lending institutions recover from losses caused by borrowers defaulting on their loans. In this respect, FDA played the role of an insurance company. Also, FDA was authorized to check borrowers’ credit records and decide whether or not a borrower qualified to participate in the FDA assistance program.

Today, down payment assistance programs are available worldwide. First-time home purchasers and low income families can count on a little help from sellers or non-profit organizations in building up the required sum. Some assistance programs are backed by local authorities. Also, there are 501 (c) assistance programs.

Assistance programs are available for people who do not have homes in possession and haven’t had one for at least 3 years. Also, if you wish to receive down payment assistance, you must make regular deposits over a long period of time.

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