The dream of homeownership is becoming a reality for more people. HUD is permitting individuals classified under the Deferred Action for Childhood Arrivals (DACA) program who are legally permitted to work in the U.S. with the U.S. Citizenship & Immigration Service (USCIS) are eligible to apply for mortgages backed by the FHA.
Because of this good news, DACA recipients have more mortgage options in their hands. FHA loans are a great option for home buyers looking to have a smaller down payment or those with lower credit scores.
In addition to being eligible for FHA loans, many down payment assistance programs are also expanding to include DACA recipients. This is a great option for lower-income borrowers to purchase a home with little or even no cash down!
What is Down Payment Assistance?
Down payment assistance (DPA) is a loan or a grant from an organization to help cover the cost of a down payment on a home. Assistance can come in many different forms. While some of these programs are loans that need to be repaid over time, many of them are forgivable after a certain period if requirements such as on-time mortgage payments are met.
The amount covered by a DPA program can vary. Some are based on the loan amount (the appraised amount or sales price, whichever is lower), while others are a fixed amount. Many of these programs can cover your required down payment, so don’t let those cost requirements intimidate you. You might be closer than you think to purchasing your next home.
What Are My Options?
There are a variety of DPA options available to DACA borrowers receiving FHA loans. FHA loans require a down payment of 3.5%, which can be a barrier to many trying to buy a home. With these DPA programs, some qualified buyers could even see their loan forgiven after living in the home for a certain period of time. Programs such as Chenoa Fund, Home Plus, and City of Phoenix Home in Five are here to help homebuyers expand their options! Check out the details of each program below.
- Down payment assistance from 3.5% to 5% of the purchase price or appraised value
- A 30-year fixed term with full amortization on the first mortgage
Down payment assistance with options:
- A forgivable second mortgage after 36 regular on-time payments, or
- A repayable second mortgage with a 10-year term 0% rate, or
- A 30-year fixed-rate second mortgage with a 5% interest rate.
- Down payment assistance can be 3, 4, or 5% of the note amount.
- DPA Second Loan will be forgiven on a ratable monthly basis over the 3-year term; accordingly, 1/36th of the original second loan principal will be forgiven (canceled) on each one-month anniversary of the original date of the loan.
- No first-time homebuyer requirement.
- Credit and income restrictions apply.
- A homebuyer education course is required.
- Available at a 30 year fixed rate.
The City of Phoenix IDA Home in 5
(Available in Maricopa County and the City of Phoenix, Arizona)
- Down payment assistance can be a 3, 4 or 5% of the note amount
- 30-year fixed rate
- Deferred principal, 0% interest, due upon sale or refinance, principal forgiven over 3 years
- Credit and Income restrictions apply
- Homebuyer education is required
- No first-time homebuyer requirement
- Forgivable second loan covering the down payment.
- Offered on FHA, VA and Conventional loans.
Receiving assistance on a down payment can make a huge impact on the journey to homeownership by avoiding a large cost upfront. If you’re ready to take the next steps in buying a home, get in touch with us today to discuss which options may work for you!