Many city and county mortgage down payment assistance program ( DPA / Grants) are available in Florida for qualified homebuyers. Programs like SHIP and others help first time buyers by providing funds to purchase a home in Brevard and Indian River County. These programs are more commonly used in conjunction with a FHA or Conventional loans as they require a down payments. Keep in mind, down payment assistance programs are not available to all buyers, they more geared towards first time buyers. Buyers have to meet income caps and qualifying standards. In addition, each program may have different requirements in place regarding classes, re payment time frame ( time you must live in the home) etc. Be sure to check with your local or county agency on all the qualifying criteria.
One of the common questions we receive is whether down payment assistance or grants can be used with the USDA Rural program? Yes they can, buyers can use these programs in conjunction with their USDA loan. However, buyer should note the USDA Rural Development loan does not require any down payment. Instead buyers will use their DPA or Grant funds to pay down their loan amount lower, or pay their closing costs, etc. Example: Let’s say your are a Florida homebuyer purchasing a home for $150,000 and you received $10,000 in grant money. Instead of financing $150,000 + closing costs you will only need to finance $140,000 + closing costs – thus lowering your debt obligation and monthly expense.
As mentioned above USDA Rural Housing loans are 100% financing by default so they eliminate the need for a traditional down payment. However the USDA program ( like any mortgage) has standard closing costs, often time 3-6% of the loan amount. The good news is USDA permits buyers to finance closing costs, assuming the home appraised value is higher than the sales price. Example: Home sales price is $115,000, closing costs and escrows for home insurance and taxes are another $6,000. As long as the home appraisal comes in at $121,000 or higher, all the closing costs can be included ( rolled into) the buyers loan.
Closing costs can also be paid by the home seller on behalf of the buyer – up to 6%. USDA offers a lot of flexibility for buyers to purchase a home with little to $0 money out of pocket. So although approved grants and down payment assistance programs are permitted under the 100% USDA program, they really aren’t needed as much as other mortgage programs that require 3.5%, 5% down, etc. Keep in mind parts of Brevard County and Indian River County are still eligible for the USDA program in 2015.
What About Gift Funds?
Like above, the buyer can receive gift funds to help pay for money down or closing costs if they like. In cases where gift funds are used, homebuyers want to remember a few important requirements.
- Gift funds must come from an eligible source like a family member.
- Gift funds must be documented to have to come directly from the donor.
- Gift Funds documentation should include – copy of check, copy of deposit slip from buyer account, and possibly a copy of donors (source) bank statement.
Florida home buyers that have questions about down payment assistance programs using them and USDA, FHA or Conventional loans – please submit the “Request Contact” form at the top right side of your screen. Mobile users can find the short Request Contact Form here. Please also be sure to call ph: 800-871-2636 and visit www.FiveStarsMortgage.com for the latest mortgage info.
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