First-time homebuyers have many programs available to help make the dream of homeownership a reality.
Everyone deserves a place to call home, but that doesn't mean doing it all on your own. FirstBank wants to help you fulfill your homeownership dreams, whether you are a first-time homebuyer or purchasing a home on a limited income. We make obtaining a mortgage as simple as possible and offer competitive rates and fees. Our Loan Officers have the knowledge to help you understand the process and what assistance is available to help you find the right home for you and your budget.
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First-Time Homebuyers
The term "first-time homebuyer" typically refers to someone purchasing a primary residence for the first time, although it can also apply to buyers who haven't owned a home in the past three years. First-time homebuyers frequently qualify for additional financial aid through various programs when purchasing a home. Our experienced Loan Officers can explain the range of programs designed to assist buyers with down payments, closing costs, and more.
Low-to-Moderate Income (LMI) Borrowers
LMI borrowers are defined by the U.S. Department of Housing and Urban Development (HUD) as those who have an income that is less than 80% of the local area median income.1 FirstBank has local Loan Officers who can identify programs to help LMI borrowers obtain a mortgage.
Down Payment Assistance
Down payment assistance (or DPA) is designed to help provide borrowers with funds to assist with a down payment for purchasing a primary residence. These programs are typically designed for LMI borrowers or first-time homebuyers who may have less than 20% saved up for a down payment. There are various types of DPA programs, some with fixed payments and some with no payments, depending on your situation and the program. There are even DPA programs for higher-income borrowers and those who already own a property.
Types of DPA Loans and Programs
Grants
A down payment assistance grant usually doesn't require repayment of the funds. Most of these types of DPA programs are government-funded or state-run programs that provide part of the down payment for eligible borrowers.
Forgivable Loans
These are low or zero-interest rate loans that are partially or fully forgiven by the lender if certain conditions are met. The criteria and specifics depend on the program offering this type of benefit.
Deferred Payment Loans
These tend to be low or zero-interest rate loans that help cover down payments and closing costs. The payments to repay the loan are typically deferred until a specific date set by the program administrator. Most of these loans are not due for repayment unless you refinance the mortgage or sell the home.
Low-Interest DPA Loans
If you don't qualify for any grants or other types of DPA loans, you may still be eligible to receive a low-interest loan that helps cover the down payment or closing costs for your home purchase. These loans typically offer a flexible repayment plan at a competitive interest rate. The downside to these is that they need to be paid back. However, they can help reduce overall costs.
Equity Share Agreement
Equity share DPA is an agreement where the program administrator becomes a partial owner of the property in exchange for down payment assistance. In this agreement, the program administrator acquires a portion of the home's future value while the buyer takes out a smaller mortgage loan. The homebuyer agrees to provide a percentage of their property (as well as a percentage of future gains if the home appreciates in value) to the program administrator. There are typically no re-payments with equity share agreements until the homeowner sells the home or refinances. Once that occurs, the seller will repay the original equity provided, in addition to a percentage of any appreciation that has occurred since the home was originally purchased. The amount of appreciation paid depends on the percentage of the equity share at the time the home was purchased.
Example:
| When Purchased | When Sold |
|---|---|
| Original home purchase price = $500K | Sale Price = $600K |
| Percentage of the purchase price funded by the equity share loan = 10% | Percentage of the sale price to be repaid to the equity share loan = 10% |
| Equity share DPA = $50K | Equity share DPA repayment amount = $60K |
Where does the funding come from for DPA?
The majority are local or state-funded programs designed to help individuals purchase their first homes in the area they cover.
How do I qualify?
There are many different programs available to help you afford the down payment on your home depending on your situation. Eligibility for down payment assistance or loans depends on various factors, such as:
- Your credit score
- Total income
- Debt-to-income ratio
- Purchase price of the home
- Completion of a home buyer education class
FirstBank Homebuyer Resources
The primary resource FirstBank offers is our expert team of Loan Officers. Their experience working with first-time and LMI homebuyers can help determine what internal or external special loan program options you may have depending on your specific circumstances.
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Providing Access To Homeownership (PATH) Grant Program
FirstBank committed $250,000 in funds to launch the PATH Arizona Grant program to expand opportunities for homeownership in Arizona. PATH offers first-time homebuyers who identify as Black or African American and meet certain income requirements the resources needed to obtain a home.
FirstBank Partner Resources
Disclosures
- In order to be eligible for LMI programs, the buyers' annual income (including asset income) shall not exceed 80% of the Median Family Income, as determined by HUD. Median Family Income amounts are subject to change and typically change annually.
All loans are subject to underwriting approval. FirstBank determines actual loan and assistance program qualification only after receipt of a complete loan application and analysis of pertinent information, such as (but not limited to) credit history, income documentation, and property valuation. Fees and restrictions apply. Survey fees and flood insurance may be required for some loans. See any FirstBank location for complete details.