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The biggest obstacle to home ownership is often the down payment — both for first-time and some move-up buyers. With rising interest rates and home prices that continue to grow, saving enough money for a down payment has become even more difficult.

Sean Moss, SVP, Director or Operations and Customer Support at Down Payment Resource recently joined us to share information about down payment programs, which agents can use to turn their sidelined buyers into homeowners.

Sean encouraged everyone to contact their mortgage partners and local housing agencies to learn about programs available in their specific areas. Agents can then promote these programs when marketing/targeting buyers.

Who offers these programs?

Home buyers can access down payment programs through the State Housing Finance Agency (HFA), cities and counties, housing authorities, non-profits, employers and more. These organizations receive federal funding and are all designed to provide down payment, closing cost or tax credit help, as well as education. Their overall goals are to design products that help make housing affordable for more buyers. And, depending on the area, the dollar amounts available can be substantial.

What are the common requirements?

Almost all programs are for owner-occupied properties, meaning vacation homes and investment properties do not qualify. They also require a minimum investment from the buyer (e.g., percent of purchase price, a hard dollar amount). Many of the programs require homebuyer education as well to ensure that buyers truly understand the homebuying process. Lastly, the home buyers must qualify for a 1st mortgage.

Are these programs only for first-time homebuyers?

No, however all down payment programs are available to a first-time homebuyer. A “first-time homebuyer” can also mean someone who hasn’t owned a home in three years. Sean shared that “37 percent of people don’t have a first-time homebuyer requirement — they could be veterans or teachers, for example.”

What are the most common homeownership programs?

The three most common homeownership programs include:

  • Down Payment & Closing Cost Help: This is the most common homebuyer program (e.g., down payment or closing cost assistance) and are typically non-profit or government funded. They offer anywhere from several to tens of thousands of dollars depending on the homebuyer and location.
  • Affordable 1st Mortgage Loans: These loans often offer reduced interest rates or PMI waivers.
  • Mortgage Credit Certificate (MCC): These are federal income tax credits that allow a buyer to claim mortgage interest paid as a tax credit (not a deduction) on their federal tax returns. Once they have taken the full credit, they can then deduct the rest of their interest as a standard mortgage interest deduction. These programs are often good for the life of that loan so long as the buyer lives in the home.

How can agents promote these programs to prospective buyers?

According to a survey by Down Payment Resource, 92% of consumers want information on down payment programs from their agent or lender. As an agent, it’s important that you first know the program basics — qualifying and benefits. You can educate yourself by getting to know the programs in your market, connecting with a participating lender (rely on their expertise) and by attending trainings provided by your HFA.

When showing a prospect listings, setting up email marketing campaigns or newsletters, don’t be afraid to share information about down payment programs in your market. Sharing these resources could create a hook for potential buyers to reach out to you to learn more. Whether it’s through your website, email, blog, newsletter or social media channels, create and share content (e.g., resources, success stories) that will capture first-time homebuyer attention.

Nurture your prospects by blogging about local programs and how to search for them, engage your lender in the prequalification process, and add down payment program-eligible leads to a special email list with information about down payments, local programs, first-time homebuyer tips, etc.

How can agents develop partnerships?

There are several benefits to building relationships with down payment organizations. For example, it’s not uncommon for state housing agencies to offer agents opportunities and tools to learn about their programs such as networking events, free marketing materials, education events that you can attend and support resources for your questions. Developing relationships with loan officers is another way to be the number one resource for your clients and prospects. Identify who your loan officer partners are and which down payment programs they participate in. Ask them about expectations, timelines, guidelines and information about programs so you can pre-qualify prospects to bring back to them. Invite your HFA to a buyers’ event to cover specific down payment programs, or consider attending a first-time homebuyer class to show your expertise, educate others and find referrals.

Watch the full recording here and learn more about programs for your clients at downpaymentresource.com.