FHA Buyer’s Choice DPA: Down Payment Assistance That Can Be Forgiven

One of the biggest challenges for many homebuyers is not necessarily being able to afford the monthly mortgage payment. It is coming up with enough money for the down payment and closing costs.

That is where down payment assistance programs can make a big difference.

One program I want to highlight is FHA Buyer’s Choice DPA, offered through one of my preferred lending partners, Lori Gray, Senior Loan Officer with CMG Home Loans.

And there is one part of this program that I think is especially important to understand: the assistance can be forgivable.

So, what is a forgivable loan?

The term "loan" can make down payment assistance sound like you are simply borrowing more money that you will eventually have to pay back.

That is not necessarily the case.

A forgivable loan is a type of assistance that can be forgiven after you meet certain program requirements for a specified period of time.

In other words, you receive the assistance upfront to help with your purchase, but instead of automatically having to repay that money, the balance can be forgiven if you satisfy the requirements of the program.

With FHA Buyer’s Choice, there are forgivable options available for either 3 years or 5 years, depending on the option for which you qualify.

The program also currently offers a 3-year forgivable second loan providing 3.5% assistance.

That could be a significant amount of money when you are trying to get into a home.

What about a repayable down payment assistance loan?

There are also down payment assistance programs that are repayable.

With a repayable second loan, the assistance is still helping you cover some of your upfront costs, but the money is not simply forgiven. It must be repaid according to the terms of that loan.

That does not automatically make a repayable program a bad option.

For some buyers, receiving more assistance upfront can make the difference between being able to purchase a home now versus having to wait and save more money.

The important thing is understanding exactly what you are getting, what the repayment terms are, and which option makes the most sense for your situation.

How FHA Buyer’s Choice DPA works

According to the current program information, qualified buyers may have access to:

• Down payment assistance up to 3.5%

• Up to 5% with the repayable option

• Forgivable options available for 3 years or 5 years

• No income limits

• Minimum FICO of 640 or 660, depending on the second loan option

• Assistance that can be used toward down payment and closing costs

• And perhaps one of the biggest misconceptions about down payment assistance: you do not have to be a first-time homebuyer

  
  

That last point is worth repeating.

You do NOT have to be a first-time buyer.

Down payment assistance is not automatically limited to someone buying their very first home.

So if you have owned a home before and are looking at purchasing again, you may still have options.

What could this mean for a buyer?

Let's say you have found a home you love and you can comfortably afford the monthly payment.

Your problem is the upfront cash.

You may have enough saved for your everyday expenses and an emergency fund, but coming up with the down payment and closing costs would drain your savings.

A program like FHA Buyer’s Choice could potentially help bridge that gap.

Instead of putting every dollar you have into the purchase, you may be able to use down payment assistance toward the upfront costs and preserve more of your savings for the things that come with owning a home.

Of course, qualifying for the program and determining how much assistance you can actually receive depends on your individual situation, the loan option you choose, and the program requirements.

Down payment assistance is not one-size-fits-all

This is why I always recommend talking with a lender before assuming you either do or do not qualify for a particular program.

There are different types of down payment assistance, different credit requirements, different repayment structures, and different rules attached to each program.

The goal is not simply to find a program that offers the most money.

The goal is to find a program and loan structure that makes sense for you.

If you are a buyer who has been saying, "I can afford the payment, I just don't have enough saved for the down payment and closing costs," this is a conversation worth having.

And if you have owned a home before, don't automatically assume down payment assistance isn't available to you.

Want to see if FHA Buyer’s Choice could work for you?

I'd be happy to connect you with my preferred lending partner, Lori Gray, Senior Loan Officer with CMG Home Loans, so you can discuss your options and get a better idea of what you may qualify for.

Every buyer's situation is different, and the best way to know what is available to you is to have the numbers reviewed by a qualified lender.

You may not need 20% down. You may not even need to be a first-time buyer. And in the right situation, some of the assistance you receive may be forgivable.

Let's talk about your options and see what might work for you.