Down Payments, Deciphered

Down payment: The percentage of the total cost of your new home that you are required to pay up front, in order for the bank to allow you to take out a loan and close.

Down payments are an integrated part of the Path to Homeownership program, ranging from 3.5%-10%, depending on what level of the Path to Homeownership program you start off in and on the type of bank loan you are going to get when you complete the program. With 20% still required for most traditional loans, the Path to Homeownership offers you multiple economical options. Let’s review the types of down payments needed for the various steps in the Path to Homeownership:

RENTAL DEPOSIT

To start a rental, you are required to put up a deposit equivalent to at least one month’s rent. If you have poor credit, or recent late pays, you may be required to put up a double deposit. At the end of your agreement, when the home is returned in the condition agreed on in your lease, your deposit is 100% refunded. Should you choose to stay in your rental and purchase it through the Path to Homeownership, your rental deposit can become part of your down payment.

VIP PROGRAM

With the VIP program, you are able to start your Path to Homeownership with a low down payment and first month’s rent, and build up your down payment to the 3.5% minimum needed by paying additional option/down payment money each month with your rent. Your monthly VIP payment varies, based on what you’ve put down, and what is still needed to reach that 3.5%. If you are in a rental and decide to move up, this is a great way to reach your goal.

LEASE OPTION

This is a powerful option for you, as a new homebuyer. To start the Lease Option, or rent-to-own level you need a minimum of 3.5-5% down. This is your down payment on the home from the bank’s perspective as well, so once your credit restoration/rebuilding is completed and you are able to refinance at a bank, your down payment has already been paid. While in your Lease Option, you have a standard monthly rental rate, and up to a $100 discount each month you pay on time. You also get rent credits each month you pay on time, and at closing these credits become part of your down payment!

AGREEMENT FOR DEED

This is a great way to jump-start your home purchase. With only 10% down you are able to get financing through the company, and in most cases this results in a lower payment than you would have at the Lease Option level. Part of your monthly payment goes towards principle and interest, just like a bank loan. You are able to enjoy the privileges and tax write-offs of homeownership. The 10% is your down payment on the home from the bank’s perspective as well, so once your credit restoration/rebuilding is complete and you are able to refinance at a bank, your down payment is already paid.

As you can see above, no matter where you are starting, we’ve got the program to guide you to success on your Path to Homeownership. What are you waiting for? Let’s work together to turn your homeownership dream into reality.

Contact us today to get started at 704-900-0404.

Until next time…

The Counselors at Affordable Home Provider

Disclaimer: We are not a lender. We are not CFPs. We are Certified Affordable Housing Providers, committed to empowering families and individuals through our Path to Homeownership program to enjoy the American dream of homeownership. We are not a credit repair company. We are affiliated with local and national credit repair companies and lenders, who work with us to make the Path to Homeownership program a success so our residents are able to purchase their own homes.

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