Buyer's Down Payment Assistance
A home buyer with no down payment should use Down Payment
Assistance. A non-profit home grant with down payment
assistance can immediately solve a dilemma and provide a
buyer the money necessary to become a homeowner.
Down Payment Assistance
(DPA) provides homebuyers with free gift money to use
towards the down-payment, closing costs, and other funds
needed to purchase a home. Up to $20,000. The funds provided
to Buyers by a Program are true gifts. No lien is recorded
against the home and there is no expectation of repayment.
Buyers Benefit
The power to purchase a home with No Money Down now.
There are many people that have good jobs and acceptable
credit histories but that have not been able to save the
considerable amount of money that is necessary for the down
payment and closing costs to purchase a home.
Sellers Benefit
Homes have a better chance of selling faster, and at
full asking price, than a seller that does not participate
with down payment assistance. They are able to market their
homes to a larger pool of prospective homebuyers than a
non-down-payment assistance home. Think about it, there are
more people in the U.S. that can qualify for a home loan but
lack the down-payment, than there are people who already
have the down-payment.
Qualifying Requirements
The mortgage loan must accept gift funds for use as your
down payment (such as FHA) and that you purchase a home from
a Seller that will participate in the Program to assist you
in buying your home. In other words, if you are approved for
your loan you are automatically eligible for a grant as long
as the Seller of the property you are buying will
participate in the Program.
|
Seller
Net Sheet Comparison |
|
Seller Estimated Net
Proceeds Calculator |
Example Sale w/o DPA
|
Example Sale with DPA
|
|
List Price of Home |
$ 100,000 |
$ 100,000 |
|
Average % Reduction |
5% |
0% |
|
Sales Price |
$ 95,000 |
$ 100,000 |
|
Less: DPA Gift + $540
fee |
$ 0 |
$ (3,540) |
|
Less: Sales Commission |
$ (5,700) |
$ (6,000) |
|
Less: Closing Costs
Estimate 2% |
$ (1,900) |
$ (2,000) |
|
Net Proceeds to Seller |
$87,400 |
$ 88,460 |
Definitions
List Price of Home – The Asking Price at which a home
is originally offered for sale.
Average % Reduction – The difference between the
Asking Price and the actual Sales Price. The average %
Reduction is the average of these differences and usually
ranges from 3% to 7% depending on the specific real estate
market.
DPA Gift – This is the donation to the DPA and is
equal to the gift amount plus a processing fee of $500 and
$40 wire fee. This example assumes the DPA has made a gift
of $3,000 to the Buyer.
Sales Commission – Real Estate sales commissions
usually range from 6% to 7%.
Closing Costs – These are the standard costs
associated with selling a home and include settlement
charges, title searches, inspections, transfer taxes, etc…
With All Else Being Equal...
Sellers Net Proceeds will be approximately the same whether
or not you utilize the Down Payment Assistance Program,
consequently you might as well benefit from the increased
marketing abilities and decreased marketing time by offering
the DPA Program.
Remember, the seller is NOT obligated and DOES NOT make a
donation to the Program if a Buyer that does not use the
Program purchases their home.
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