by Hassan Nicholás
By request we have been asked to do a demonstration of how using a down payment assistance program could work with alleviating higher costs and narrowing the affordability gap between buyers and home prices.
The bottow example uses the County of Los Angeles HOP (Home Ownership Program), ADDI (American Dream Down Payment Initiative), and MCC (Mortgage Credit Certificate) programs to illustrate this concept:
- HOP offers a deferred loan of the lesser of $90k or 25% of the appraised value in targeted areas, and the lesser of $80k or 20% in non-targeted areas.
- ADDI offers the greater of $10k or 6% of the appraised value of the home
- MCC offers between 15-20% tax credit, depending on area.
Remember that this is only one possible scenario out of many. It is just a sneak preview as to what we cover in our workshops to help your understanding of alternative financing methods and strategies.
Down payment assistance can be a great tool for a first-time homebuyer, but for many reasons explained here and here, you should always consider all options.
2 comments:
This post does a great job of giving examples with real numbers. This article about down payment assistance is a nice complement because it explains some of the thought processes and motivations behind using down payment assistance.
Thanks Cora. That is a good article. We wrote something similar covering the advantages and disadvantages to using down payment assistance programs. Hopefully, programs like these will continue to exist for homebuyers
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