Down Payment Assistance Programs: The Good, The Bad and The Ugly

I get many calls throughout the week regarding Down Payment assistance programs and whether or not they work.  There are many programs out there Neighborhood Stabilization Program (NSP), Redevelopment Home Ownership Program (RHP), and Mortgage Credit Certificate (MCC) to name a few. So are these programs beneficial to a home buyer? Do they actually work? Why don't agents want to work with you using one of these programs? I think once you read below, you'll be able to make a good decision for yourself as to whether these programs are right for you.

The Good:

·         These programs help clients who otherwise wouldn't be able to purchase a home.

·         These programs offer free money (to an extent) and affordable housing options.

·         These programs help to establish neighborhoods for long term growth.

The Bad:

·         These programs are difficult to navigate for Realtors so many will not represent clients using this type of assistance.

·         The process is slow, usually a 60 day or longer escrow.

·         There are usually frequent changes of the programs status and sometimes during the process, the money is no longer available.

·         They usually involve a period that the original owner must live in the home. If they sell or rent within that time period, you may have to pay the money back.

The Ugly:

Overall, down payment assistance programs work and using one may be right for you. But unless your Realtor, the listing agent and the lender are all familiar with the specific program you are using, it can be difficult to close a successful transaction. There is a lot more effort for the agents involved and usually for less commission so many are just not motivated to invest the time and effort. Sad to say, but true. Also, buyers should be aware that the homes they have to choose from may be limited because not all sellers are willing to accept offers using down payment assistance. So can they work? Yes. Is it a little more difficult? Yes. But if you are flexible and the agent team that you choose is experienced, you can be a homeowner using down payment assistance.