5 Steps to Secure Down Payment Assistance
For many would-be homebuyers, the down payment is the only thing holding them back from buying a home. In fact, a survey showed that 37% of non-homeowners said that their lack of a down payment was preventing them from buying a home.
However, many potential homeowners don’t realize that down payment assistance may be available to help them accomplish their goal of home ownership. “The down payment is the biggest obstacle that keeps people from buying a house,” says Jamie Hermann, Mortgage Sales Manager and VP at Old National Bank. “But there are opportunities to get into a house without spending years saving up for a down payment, or even without making a big dent in your savings.”
Getting help with a down payment may sound too good to be true, but it is a reality for many homebuyers. To find out whether down payment assistance may be an option for you, follow these five steps.
1. Reconsider your down payment needs.
It’s a common assumption that you have to bring a down payment of 20% of the purchase price in order to buy a home. But Hermann says that’s simply not necessary.
According to the 2023 National Association of Realtors Buyers and Sellers Generational Trends report, the median down payment among homebuyers of all ages was 13%. Among those ages 23 to 31, the median down payment was 8%. And some loan programs allow buyers to make down payments that are much lower, such as 3%, 1% or zero.
The first step to getting down payment help is to understand it’s possible to buy a house with a lower down payment, and assistance is available to help you get there.
2. Talk to a lender who offers down payment assistance programs and is knowledgeable about various down payment assistance programs.
“In a lot of cases, potential homebuyers come in and sit down with me and we talk through the process of qualifying for a mortgage,” Hermann says. “Many people don’t believe they can qualify, and when they learn about down payment assistance, it seems too good to be true.”
Old National offers an in-house down payment assistance program for low-to-moderate income homebuyers in certain communities. In addition, the bank also partners with other organizations, such as state housing authorities, city and county governments, the U.S. Department of Housing and Urban Development (HUD), housing counselors, and nonprofit organizations that offer down payment assistance programs.
3. Get prequalified for a mortgage.
While researching down payment assistance programs, a buyer should consider getting prequalified for a home loan. Getting prequalified helps provide an idea of how much home you can afford and how much a lender may loan you. For some, getting prequalified helps uncover actions the buyer may need to take before proceeding to a full mortgage loan application. For example, a buyer may need to clean up their credit score or pay off some other debt first.
“We want to work with homebuyers,” Hermann says. “If they have issues, it’s not an automatic no. If someone is willing to make changes and work with us, we will help them get where they need to be to get qualified.”
4. Consider various options for assistance.
It may come as a surprise that there are a number of different options available for down payment assistance for those who qualify. For example, Old National’s down payment assistance program will provide 3% of the purchase price, up to $10,000, for qualifying homebuyers. Those who qualify and purchase in select areas can receive up to $15,000 towards the purchase price.*
Even better, some down payment assistance programs can be combined so the qualifying homebuyers often stack their awarded funds to achieve a sizeable down payment, creating instant equity in their new homes.
“Old National and other organizations are committed to offering down payment assistance because the pride of home ownership really makes a difference for a lot of families,” Hermann says. “Owning a home can help create generational wealth and gives them something to pass on to their kids.”
5. Learn as much as you can about the mortgage and home buying process.
Many down payment assistance programs require participants to take a home buyer education course in order to qualify. Rather than waiting until the last minute to take the course, Hermann recommends taking it as early as possible in the process so you can benefit from all the knowledge it will provide.
“You get more benefits if you take it early,” he says. “I’ve yet to talk to anyone who took the course and said they didn’t learn anything from it.”
Learn more about down payment assistance from Old National Bank and whether you qualify by speaking with an Old National Mortgage Expert in your community.
*Down payment assistance programs are subject to availability. Additional qualifications may apply. Some restrictions may apply and program conditions subject to change without notice. All loans are subject to credit review and approval. Property insurance required. Rates are subject to change daily. Contact an Old National Mortgage Lender for product details. Equal Housing Lender. NMLS #459308.
