Home buyers seeking assistance paying their down payments are better off in Southern real estate markets than elsewhere, according to a new survey and analysis by Down Payment Resource (DPR).

The DPR’s June Homeownership Program Index analyzed 1,654 programs available nationwide. Across Down Payment Resource’s databank, nationally, 90 percent of programs are funded with the greatest number of programs available in the South.

. The Index measures homeownership programs available across the country and the percentage of funded programs. DPR, the nation’s only search engine for homebuyer programs, aggregates the benefits and eligibility requirements for programs including down payment assistance, grants, affordable first mortgages, and tax credits.

 

June 2014 Homeownership Program Index

 

The Homeownership Program Index highlights the availability of valuable homeownership programs administered by state and local Housing Finance Agencies (HFAs), nonprofits, and other housing organizations. Programs are funded in a variety of ways, including mortgage revenue bonds and mortgage backed securities.

Many borrowers today have the income and credit rating to qualify for a home, but don’t have the funds for the down payment. With today’s median existing-home price of $201,700, a 20 percent down payment would be more than $40,000, a challenge for first-time homebuyers managing stagnant wages and student loan debt. In fact, according to the National Association of REALTORS® (NAR) April Realtors Confidence Index, sales to first-time homebuyers decreased to 29 percent. Realtors report that tight underwriting standards and increases in FHA mortgage insurance costs are discouraging buyers.

According to DPR’s analysis, an average of 70 percent of for-sale homes could be eligible for one or more homeownership programs (subject to the buyer’s eligibility). In addition, HFAs administer low down payment programs and, in some cases, programs that do not require mortgage insurance.

“Homeownership programs can be especially valuable for homebuyers whose qualifications are outside the Qualified Mortgage (QM) guidelines. They will find their most affordable options through HFAs and their participating lenders,” said Rob Chrane, President and CEO of Down Payment Resource.

 

Programs include:

• Home loans: competitive interest rates, below-market interest rates, 100 percent financing
• Down payment and closing cost assistance
• Grants for down payments, which do not have to be repaid
• Mortgage Credit Certificates (MCCs): up to $2,000 in annual tax credits that are good for the life of the loan
• Rehab loans that allow buyers to renovate certain properties.

“While some housing experts advocate for a 20 percent down payment, it may not be possible or advisable for many prospective buyers. Every situation is different and it’s important that buyers investigate all their home financing options,” said Chrane. “When using a homeownership program, buyers retain savings for moving expenses as well as for emergencies and retirement. Most programs also require homeownership counseling, a key predictor of successful homeownership.”