Grant Programs- These are monetary ‘gifts’ that do not have to be repaid by the home buyer. I love these because they also do not incur ‘a lien’ on the property and there is no ‘note or deed’ associated with it.
Second Mortgage Programs- these are second mortgages, also known as subordinate liens that are required to be paid back. Federal, state, or local government fund these types of programs. As well as non-profits or employers that want to make a significant ‘mark’ in their service area. Payments may or may not be deferred depending on the actual program. However there are some programs that forgive all or portions of the payment over time. Your lender can determine the repayment details and requirements once you apply for the program.
Silent Second/Deferred- with these programs repayment of the original or primary down payment assistance is postponed until either the borrower (home buyer) sells, or moves out of the home. Repayment is also due if the borrower refinances or rents the property.
Repayable- also known as ‘soft’ second mortgage programs. These provide home buyers with the down payment so that they can have the funds to purchase a home now. The funds are received at ‘closing’ as a second loan. There is usually no interest associated with it, but there is a possibility of interest being accrued or amortized. Repayment may be delayed for a period of months or years before you have to start paying it down.
To find out more about down payment assistance programs and how they work visit the links below. You are also welcome to contact me for personal guidance and to speak directly with lenders that can assistance with these types of programs.