Down Payment Assistance
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Down Payment Assistance and Grants For Homebuyers

ByGustan Cho

This BLOG On FHA DPA Mortgage Guidelines On FHA Home Loans Was PUBLISHED On March 19th, 2019

FHA DPA Mortgage is available in certain areas.

  • There are various FHA DPA Programs
  • Many DPA Mortgage Programs are grants where homeowners do not have to pay it back if they live in the home for a certain amount of time
  • Many states like Illinois, homeowners pay property taxes in arrears
  • When homebuyers purchase homes in states like Illinois where property taxes are paid in arrears, they will get property tax proration credits
  • What this means is that home seller owe buyers the prior year property taxes
  • Homebuyers can use property tax proration credits for their down payment
  • There are times where homebuyers do not need to use DPA Mortgage Programs

We will discuss DPA Mortgage and Low Down Payment on home purchases on this blog. Gustan Cho Associates offers Down Payment Assistance Programs for our borrowers.

FHA Down Payment Requirements

HUD, the parent of FHA, requires borrowers with at least 580 FICO to have a 3.5% down payment. Borrowers with under 580 credit scores can qualify for FHA Loans with a 10% down payment with an approve/eligible per automated underwriting system. DPA Mortgage Programs has been created to help borrowers who do not have the 3.5% down payment. There are various FHA DPA Mortgage Programs to assist homebuyers with their down payment.

How Does FHA DPA Mortgage Programs Work

There are multiple FHA DPA Mortgage Loan Programs. Each FHA DPA Mortgage Program depends on the state and county. We will list general comprehensive guidelines and how the process works:

  • The program was designed to assist homebuyers with their down payment
  • There are grant programs where the DPA does not have to be forgiven if the homeowners occupy the property for a certain time period
  • DPA Programs has been designed to promote homeownership for first time home buyers
  • Funds can be used for both down payment and closing costs
  • Depending on the loan program, borrowers may need higher credit scores than the minimum 580 required by FHA
  • Closing costs can be covered by sellers concessions and/or lender credit
  • Gift funds allowed on most FHA DPA Mortgage Programs
  • Borrowers need to meet HUD 203(b) Guidelines
  • One to four units, HUD Approved Condos, Townhouses, PUDS, Manufactured Homes are eligible
  • Only owner-occupant primary borrowers are eligible
  • Will accept non-occupant co-borrowers
  • Income limits apply
  • Income needs to meet 140% of area median income or maximum allowed by FHA
  • Recent graduates of school need six months full-time job seasoning if they are salaried wage earners and 12 months seasoning for variable income wage earners
  • If borrowers are in a Chapter 13 Bankruptcy repayment plan, Chapter 13 needs to be discharged to qualify for DPA Programs
  • Must enroll and complete the homebuyers education course

Eligibility Requirements 

FHA Down Payment Assistance Programs differ among the various available loan programs in different states and counties. There are grant programs that no repayment is required if a borrower lives in their home for five years or more. However, if homeowners refinance and/or sell their homes within a specified period, the DPA may have to be paid from the proceeds of the home. There are minimum credit score requirements depending on the DPA Program. Most FHA DPA Mortgage Programs require borrowers to have 620 to 640 credit scores. Please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response to see what types of FHA DPA Mortgage Programs are available in your area. Or email us at gcho@gustancho.com.