WHAT IS THE DSHA SMAL DOWN PAYMENT ASSISTANCE LOAN?
For many people in Delaware, the idea of saving enough for a down payment and closing costs can hinder their dreams of buying a home of their own. There’s no need to give up your dream of homeownership - DSHA's Second Mortgage Assistance Loan (SMAL) may be able to help. The Delaware SMAL Down Payment Assistance Loan helps Delaware homebuyers who are eligible for any of DSHA’s Homeownership Loans and gives them access to up to $8,000. These funds can be used to cover down payment and closing costs associated with buying a home.
The DSHA SMAL Down Payment Assistance Loan Program assists buyers who meet set income restrictions and credit requirements and used an FHA Loan, a USDA Rural Housing Loan, or a Conventional Mortgage Loan for their first mortgage.
WHAT ARE THE TERMS OF THE DSHA SMALL DOWN PAYMENT ASSISTANCE LOAN?
The DSHA SMAL Down Payment Assistance Loan is a second mortgage loan secured against the property you are purchasing as your primary residence behind a DSHA first mortgage. If qualified, borrowers can get up to $8,000 with an interest rate of 3%. The loan is deferred for 30 years - you do not need to make a payment until the 361st month that you have the loan. This is an excellent option for borrowers who are worried about paying back the loan at the same time as their initial mortgage. You’re given ample time to plan around your other obligations.
With that being said, interest will accrue each month that you have the loan. Making zero payments will increase the loan year by year. For example, at the end of the first year, you would now owe $8,240 instead of just the $8,000 you borrowed.
Some other things to note about the Delaware SMAL Down Payment Assistance Loan Program:
You can use 100% of the SMAL loan to pay for the down payment, normal and customary closing costs, or reimburse yourself for other expenses incurred prior to closing, such as appraisal, application fees or earnest money down payment provided when you signed your sales contract.
The balance becomes due upon refinancing, sale, transfer of title or when the property is no longer the primary residence, whichever occurs first.
- The SMAL must be paid off in full if you refinance your first mortgage loan, sell the home, or no longer occupy the home as your primary residence.
WHERE CAN I USE THE DSHA SMAL?
The Delaware SMAL Down Payment Assistance Loan can be used in all three counties of Delaware which include New Castle County, Kent County, and Sussex County. Some restrictions apply, such as:
The SMAL can only be used in the state of Delaware
Must be used by someone purchasing a home as their primary residence
The Purchase price of the home must not exceed the maximum purchase price limits for 2018
The household income calculated by DSHA includes all members of the household that earn income whether or not they are on the loan. Please see my full blog on the DSHA SMAL Down Payment Assistance Program to learn more about maximum household limits associated.
WHAT ARE THE QUALIFICATIONS FOR A DSHA SMAL LOAN?
In order to apply for a DSHA SMAL down payment assistance loan you must meet the following requirements:
Must be purchasing the home as your primary residence
Must be under the maximum household income limit for the SMAL
All borrowers MUST have at least a minimum 640 FICO credit score
Must use DSHA first mortgage loan program to purchase the home
Non-Occupying co-borrowers are not allowed on the first mortgage loan
The maximum debt to income limit for the program is 45%
Must NOT exceed the maximum purchase price limit for the county
Must Complete 8 Hours of HUD Approved Home Buyer Counseling
HOW DO I APPLY FOR THE DSHA SMAL DOWN PAYMENT ASSISTANCE PROGRAM?
You can only use the SMAL loan in conjunction with a DSHA first mortgage loan - this means you must apply with a DSHA approved lender. The John Thomas Team can help you figure out whether you’re qualified and navigate the loan itself - Call 302-703-0727 to speak with DSHA Approved lender or APPLY ONLINE.
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