Down Payment Assistance From The Seller

There are different types of down payment assistance. 

- There are various programs that state and local governments offer.  These programs come and go, some you have to payback, and some you don't.  Some require you to stay in the home a certain lengh of time, so do not.  The best thing to do is to talk to your professional Realtor and or lender and see if they are aware of any local programs.  

- There are down payment assistance programs that lenders offer.  Again, this will vary lender by lender, but be aware that nothing is FREE (ok, unless it's a grant, we'll disuss that another day).  The lenders, in most cases will get their money back, normally with a little higher interest rate. 

- Another way to get down payment assistance is from the seller, we also call this sellers help.  Basically what you are doing is asking the seller to give you money back at settlement to help you be able to purchase their home. 

For example, if the house is listed for $150,000 and the you offer $150,000 with 3% sellers help, that would mean at settlement the seller is giving you $4,500 “down payment assistance”, so they are making $145,500 instead of $150,000.  

FHA will allow up to 6% sellers help, but most sellers do not want to give that kind of money back to the buyer, especially as aggressive as the market has been. So the norm is 3%. (6% of $150,000 is $9,000, that's a lot of money, especially if the seller owes $142,000 to the bank.)

So first, each seller, every house is case by case. there is no way of knowing if the seller will give you “down payment assistance” until we actually make an offer on a house. 

 There are things that we can do to make it easier for the seller to give you sellers help. 

In the $150,000 example, you could offer $154,500 with $4,500 “down payment assistance”. 

If you offer above list price, you as the buyer, would need to be comfortable paying that much for the house,  Then the bank will need to appraise the home for the higher price (that can be tricky as well).

As you can see, there are a lot of moving parts when buying a home and trying to negoiate "down payment assistance".  This is just the tip of the iceburg and a pretty simple example.  You as a buyer will need to make some educated guesses, many decisions and a whole lot of emotions and stress. My job is to try and reduce that stress. 

The market is starting to slow down a little, that is great news for the buyers, not such good news for the sellers.  One of my favorite quotes for home buyers is, "you don't make money when you sell your home....  you make money when you buy your home. "  We at Maryland Real Estate Professionals want to make sure that you receive the best deal possible for the home you want, with as little stress as possible.  

Hakuna Matata - It means no worries, for all of your real estate days!