Down Payment Assistance using Real Numbers

Down Payment Assistance using Real Numbers

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.

Subsidy Programs Update

Programs & Status

LAHD Low Income, Mod 120, Mod 150 - January 2009*

LACDC HOP - November 2008*

LACDC ADDI - July 2008*

LAHD ADDI - Available

LAHD MCC - Available

CalHFA (ExtraCredit Teacher, CHDAP, CHAP, HiCAP, etc.) programs - Available

*Reflect anticipated dates that are not guaranteed.

I already know what some of you are thinking. There's no way on earth I'm going to wait till November or January of next year to see if these programs will be available. For others, this is just part of a delayed waiting game that reflects the current real estate market and state of economy.

If you were counting on down payment assistance the question you should ask yourself is, will the lack of sufficient down payment assistance programs prevent my purchase or delay my purchase? If prices for your area are predicted to continue to fall, then it wouldn't exactly be advisable to buy now anyway, because you would missing out on potential savings.Your decision on whether to purchase now or later will depend on well you understand this market - specifically, your local market. If you're confused about the When you should buy, look at my list of the How should by first...

News Wire: County of LA Programs - Fully Expended

Another blow has been dealt to first-time homebuyers wishing to take advantage of government-back subsidized loan programs. The County of Los Angeles' Homeownership Program (HOP), American Dream Down Payment Initiative (ADDI) and S-HOP programs are now out of funds for an unspecified amount of time. Buyers who have already approved loans from these aforementioned programs are likely to be put on a waiting list or have their loan carried out in the pipeline to closing. Others, such as those getting pre approvals, will be stuck until the County replenishes it's funds - hopefully, around March/April of this year. But until then, all we can do is wait...