Down Payment Assistance Loans (DPA)
What is a DPA Loan?
A DPA Loan is designed for those who need assistance with the down payment costs. Often times a borrower will qualify in all other aspects of a loan but will not have enough cash on hand for a down payment. Down payment assistance (DPA) helps homebuyers with grants or low-interest loans that reduce the amount they need to save for a down payment.
Typically each state has a variety of Down Payment Assistance Guidelines that can offer helpful benefits to those looking to purchase their first home.
Not all DPA products are created equal!
Private Funded DPA
We proudly offer privately funded FHA DPA (Down Payment Assistance) programs. What this means for you is more lenient guidelines so you can qualify and get the home of your dreams! We are DPA experts, so we can go over the pro’s and con’s of each program. This way you get the loan that’s best for your situation. Here are some Highlights of this DPA Program.
- Follows all FHA Guidelines (Spot Approval Condos allowed)
- 600 Minimum Credit Score
- Not required to be a first time Homebuyer
- Forgivable & Repayable Options
- Single Family Residence, 2 UNITS, Condo & Townhome
- Must be Owner Occupied
Some restrictions apply for the following states Alaska, South Carolina, and North Carolina.
This fund does NOT have income restrictions.
However, in order to receive the best rates, borrowers must have a qualifying income less than or equal to 135% of the area median income based on the state and county of the property to be purchased.
The down payment assistance program remains funded all year long.
This down payment assistance is not a bond program. CBC Mortgage Agency does not run out of funds for its program.
Geneva Financial proudly offers this fund to its clients. If you have any questions please reach out to: Mwerley@Genevafi.com
State Funded DPA
We offer various State Funded DPA programs, but specialize in IHDA & IHDA’s new SmartBuy Program! For a full list of FAQ’s and Information about SmartBuy, please visit the IHDA Website: https://www.ihdamortgage.org/smartbuy
One program, Two types of assistance.
SmartBuy is helping eligible homebuyers pay off up to $40,000 in student loans plus $5,000 in assistance towards down payment and closing costs while buying a home!
Will I have to pay IHDA back for the student loan assistance? How is the assistance structured?
SmartBuy is unique from other IHDA Mortgage programs in that it uses a promissory note and deed restriction:
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The promissory note is the student loan assistance that is forgiven each month you live in your home 1/36th of the assistance amount is forgiven. After 3 years (the 36 months) the full amount will be forgiven.
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The deed restriction requires that if you choose to refinance or sell your home within the first 3 years, a portion of funds will be due, and you will be required to sell it to someone who qualifies under IHDA’s income and purchase price limits, but this does not mean the buyer of your home is required to use an IHDA Mortgage program.
After you occupied the home as your primary residence for three years, the promissory note is fully forgiven and the deed restriction will be released.
Remember, the deed restriction and promissory note are separate from the $5,000 down payment assistance 2nd mortgage, which requires repayment whenever the following occurs:
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Sale of the home
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Refinance of the home
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30 years have elapsed since closing
Will I have to repay the $5,000 down payment assistance loan?
Yes, in combination with student loan debt relief, SmartBuy also provides Down Payment Assistance (DPA) in the form of a deferred $5,000 2nd mortgage. This is a 0% interest 2nd mortgage with no monthly payment.
The original principal balance ($5,000) must be paid back if/when any of the following occurs:
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Refinance of the home
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Sale of the home
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30 years have elapsed since closing
Am I required to take the $5,000 deferred down payment assistance?
No!! Borrowers are not required to utilize the down payment assistance and can opt-out. Please note that while the down payment assistance does require repayment when you sell or refinance the home, it has no monthly payment, bears no interest, and can be prepaid at any time without penalty.
You should carefully consider your budget as the down payment assistance will lessen the amount you need to bring to closing and allow you to hold on to your own funds that can be used in an emergency or home repair.
How is the assistance calculated?
The SmartBuy student loan assistance is the sum total of the borrower’s (or borrowers’ if you have a co-borrower) student loans or $40,000, whichever is lowest.
The optional $5,000 down payment assistance is a fixed amount.
Both forms of assistance are NOT dependant on the purchase price or 1st mortgage loan amount. IHDA Mortgage does set a minimum purchase price or minimum loan amount on any of our programs.
What types of student debt can be paid off via SmartBuy?
The debt must be from an eligible educational institution that is an accredited:
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public, nonprofit, or proprietary (privately owned profit-making) college
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university
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vocational/trade school
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postsecondary educational institution
The institution must be eligible to participate in a student aid program administered by the U.S. Department of Education. (Most accredited postsecondary institutions meet this definition.)
Parent PLUS loans cannot be paid off with SmartBuy assistance, that will need to be paid with the borrower’s funds (or eligible gift funds).
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