The Basics of Down Payment Assistance
Down payment assistance is part of your down payment is usually funded at the state or local level by a nonprofit charitable organization or even a public entity, such your labor union or employer. There are also programs provided by lenders!
A grant-type of down payment assistance, such as those from a nonprofit, must meet two requirements for it to be considered assistance and not a gift. First, it must be available through an application process and second, the grant must be available to the general public. In other words, the grant cannot be created just for you.
Down Payment Assistance from Sellers
Before the laws changed in 2008, sellers could contribute to the buyer’s down payment through a “middleman” service that kept an account for the buyer. Although this option is no longer available, there are ways that the seller can still help you with the down payment.
The trick is to negotiate for other items as part of the home buying transaction. For example, you can ask the seller to assist with the title insurance. You can also ask the seller to help pay for points to lower your interest rate or to contribute to your property taxes.Keep in mind that there is a limit as to how much the seller can contribute. The limits are based on the type of home loan you’re using.