Student loan debt is one of the biggest challenges impacting millennials’ ability to purchase their first home. Research from the National Association of Realtors shows that millennials can expect to be delayed from home-buying for a median of seven years.
There are options out there, however, which many may not be aware of, which can make the prospect of purchasing a home more realistic. In fact, according to a 2016 ATTOM Data Solutions survey, among the best unintentionally kept secrets are the close to 2,500 down payment assistance programs out there. These programs help buyers save $17,766 on average over the life of their loan. It is crucial that a homebuyer in today’s market is aware of all the viable options for purchasing a home.
For those who may be struggling to save enough for a large down payment, there are several ways to go about applying for grants or down payment assistance. The National Homebuyers Fund, for example, has multi-state Down Payment Assistance programs that offer closing assistance or down payment grants for up to 5 percent of the loan amount.
The U.S. Department of Agriculture also has low- and zero-down payment options via its Single Family Housing Guaranteed Loan Program, which helps lenders offer low to moderate-income households purchasing opportunities in rural areas, for which closing costs and other related expenses can be rolled into the loan.
There are also local options available on a state-by-state basis. For example:
Baltimore, Md./Washington, D.C. – The Maryland Mortgage Program offers a discounted mortgage rate and up to $5,000 in down payment assistance when buyers choose to live in a sustainable community.
Ohio – Grants for Grads offers reduced-rate mortgages for first-time homebuyers who’ve completed any sort of degree program within the last four years.
Rhode Island – The First Down Program allows first-time homebuyers to purchase a one- to four-family home or condominium with down payment assistance of $7,500, forgivable after five years of owning the home as a primary residence.
These are only a few of the available down payment assistance and grant programs that can help consumers with high student loan debt achieve their homeownership dream. It is still important, however, in the midst of all these options, for buyers and agents to first consult a financial expert before participating in or recommending these programs. Buyers should be sure to assess whether these programs are financially worthwhile.