The FHA down payment assistance program is intended for first time home buyers, who make enough income to qualify for a home loan but for some reason or another just don’t have the down payment needed to buy it.
Typically with an FHA loan, the buyer will need to put as a down payment at least 3.5% of the purchase price of the home.
So for example, if you were buying a property that was being listed at $100K, then you would have to make a $3500 down payment if you were applying for the traditional FHA loan.
Now with the FHA down payment assistance, instead of putting 3.5% as a down payment, you would only need to put .5% or a half of a percent as a down payment on the property.
So, for example if you’re buying a $100K house, instead of putting $3500 as a down payment, you would only need to put $500 as a down payment.
Now you might be wondering, what happens to the other 2.5% that I’m not paying for on the down payment?
Well this amount, gets put as a second lien on your property, however you don’t have to make any payments on it, and usually within three years that second lien will be removed.
The only downside to this particular product is that there are income limitations depending on the county you’re buying in.
If you’re making too much money, or if you’re making more than the income limitation, then you won’t qualify for this FHA down payment assistance.