If you’re aiming to buy a home and looking to reduce the amount of cash needed at closing, homebuying assistance programs can be a great option. These programs typically provide help with down payments or closing costs, making it possible for you to afford a home sooner rather than later. According to Jeffrey Ruben, president of WSFS Home Lending in Greater Philadelphia, about 12% of closings at WSFS Bank rely on some form of homebuying assistance.
Eligible buyers can receive an average benefit of $18,000 through these programs, but the qualifications can be strict and there may be conditions attached to the funds. It’s important to do your research and understand the details before accepting any assistance.
“Locked Out” is a series that explores the challenges of buying a home and the potential solutions. In this article, we’ll look at who offers down payment assistance, when it’s beneficial, and what buyers should consider before accepting help.
Not all programs are created equal
When researching homebuying assistance options, start by looking at state and local government programs, as they make up the majority of available programs. Nonprofits and niche regional programs also offer assistance to homebuyers. While first-time buyers with lower incomes have more options, repeat buyers and higher earners may also qualify for assistance.
Ruben recommends government-backed programs as they are often designed to achieve public goals, such as neighborhood revitalization. While home builders may offer buyer credits, it’s important to be cautious when dealing with in-house financing options.
When considering assistance programs, look beyond the financial benefits and evaluate if the program aligns with your future plans.
Does the program fit your future plans?
Consider how the assistance is structured, whether it’s a grant, tax credit, forgivable loan, or a loan with repayment requirements. Each type of assistance has trade-offs that could impact your future homeownership goals.
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