Trying to buy a first home in America’s most expensive housing markets is just painful. Even as you start scraping together money for a down payment, home prices keep rising and rising—making that goal seem just about impossible. How can you wina race when the finish line keeps moving farther away?
But what many aspiring homeowners don’t realize is there is a jaw-droppingamount of financial help available for first-time buyers in many of America’s priciest markets. In some, a buyer can score as much as $100,000 in down payment assistance.
No, that’s not a typo.
This type ofassistance comesin severalforms: low-interest-rate loans, grants, tax credits, and other creative financing options that can have buyers moving into that dreamycondo or cute three-bedroom house much sooner than expected. In some metro areas, buyerscan even get interest-free, deferred-payment loans that don’t need to be paid back if theystay in the home for a certain number of years.
So what’s the catch? Well, actually there isn’t any—although most of these assistance programs have eligibility requirements ranging from buyers’ income to the maximum price of the home their hearts are set on.
“Many home buyers overestimate their down payment and aren’t aware of programs that could boost their buying power,” says Tracey Shell, a spokeswoman at Down Payment Resource, which uses software to connect buyers, real estate agents, and lenders to aid programs.“By doing some upfront research, buyers get a better picture of all of their home financing options. It could save them money on their home purchase and potentially over the life of their loan.”
To figure out where buyers can score the most down payment assistance in the priciest metros, the Atlanta-based Down Payment Resource looked at all the help available for aspiring homeowners. Itthen ranked these areas, which include surrounding suburbs, by the average amount of monetary aid buyers can score. We included a few of the many programs offered in those metros below.
Realtor.com® provided the median home prices. The median down payments cited, many of which are well under the traditional 20%, come from a beta.realtor.comanalysis of Optimal Blue mortgage data. We chose only one metro from each state where buyers can score the most assistance to give a sampling of what’s available around the country.
So if you dream of becoming a homeowner and could use a little extra cash for the purchase, read on!
1. Los Angeles, CA
Median home price:$675,000
Median down payment: $79,000
Average down payment assistance: $40,598
Step right up and get ready to liveamong the stars of Tinseltown! Well, sort of. You probably still can’t afford the Hollywood Hills, but since this is such a high-cost market, the maximum limits for income and purchase prices are higher as well—and you can get more money. Plus, with competition between statewide providers California Housing Finance Agency and the Golden State Finance Authority, buyers may get even more help than they expected.
“Renters love it when I tell them that there are assistance programs that can make it so that their monthly house payment islower than what they’re currently paying for rent,” says Los Angeles Realtor®Debby Moussighi-Kohut.
2. Miami, FL
Median home price:$363,500
Median down payment: $18,875
Average down payment assistance: $31,445
Miami may be known as a tourist destination withits picturesque beaches and round-the-clock nightlife. But the city was hit particularly hard by the last housing bust and the wave of foreclosures that followed. The city has since made great strides to rebound. Buyers these days can check out the Miami-Dade Economic Advocacy Trust Homeownership Assistance Program, which offers up to $7,000 as a deferred-interest loan for first-time buyers. Borrowers won’t even have to pay it back if they stay in their homes for 10 years. That’s not too shabby for a home near the beach.
3. Seattle, WA
Median home price: $429,500
Median down payment: $29,600
Average down payment assistance: $25,375
Financial aid is practically raining down on Seattle shoppers. For example, Washington’sHome Advantage Program offers prospective homeowners no-interest loans for 4% of the purchase price of their new abodes to help cover down payment and closing costs.
“A lot of immigrants are recruited to come here towork in high tech, and while they have greatsalaries, they don’t necessarily have a lot of money saved up for a downpayment,” says Realtor Lily Lei of Re/Max on the Lake. “There arefinancial assistanceprogramsthat give them help with their down payment and enable them to live in already established communities where their childrencan go to great … schools.”
4. Boston, MA
Median home price:$452,500
Median down payment: $50,005
Average down payment assistance: $21,608
Financial assistance in this part of Massachusetts could certainly be considered “Boston Strong.” The city has a program that gives up to 3% of the purchase price of a home to assist with down payment and closing costs. That no-interest, deferred-payment loan is even forgivable after 10 years. It’s like the city’s gift for those who call the metro home.
5. New York, NY
Median home price:$418,500
Median down payment: $42,400
Average down payment assistance: $19,514
The aid available in New York isn’t going to help the Average Joe or Jane move into a luxury penthouse in the expensive heart of Manhattan. But the assistance can be invaluable tothose on a budget who are willing to travel. For example, theNassau County (NY) Down Payment Assistance Programoffersfirst-time buyers on nearby Long Island up to $25,000 for adown payment. The best part? They don’t have to pay it back.
“This assistance is perfect for peoplewho live in outlying counties, or in some parts of New Jersey … [that] are very commuter-friendly,” says New York real estate agentJamie Rappaport.Suddenly, homeownership in this major metro feels a lot closer, doesn’t it?
6. Denver, CO
Median home price:$477,000
Median down payment: $36,925
Average down payment assistance: $16,121
Through state, county, and local programs, buyers can get a grant (yes, free money thatdoesn’t need to be paid back) ofup to 4% of their first mortgage amount. So those whopay $480,000 for a home could thank Denver for a gift of $19,200 to put toward their new abode.
“I’ve helped find assistance programs for my hairdresser, my plumber, and a single mom,” says RealtorDon Bobeda of Berkshire Hathaway HomeServices Preferred Real Estate. The mom “was looking at renting, but she found out she could afford to buy thanks to a grant from theColorado Housing and Finance Authority.”
The best part about these government programs is applicants are required to take classes to ensure accountability—as well as to provide some useful financial and home buying tips, she says.
7. Washington, DC
Median home price:$429,000
Median down payment: $22,515
Average down payment assistance: $15,917
This is one market where the government really works for buyers. Because Washington, DC, and parts of Maryland and Virginia are included in this metro area, there are far more state programs here than in any other market in this study. The District of Columbia Department of Housing and Community Development provides interest-free loans of up to $50,000 for down payment help, plus $4,000 more for closing costs. And there are many other programs available for veterans and folks who work in government, education, and health care, just to cite a few professions.
8. Nashville, TN
Median home price:$319,900
Median down payment: $13,089
Average down payment assistance: $15,614
While there are fewer city and county assistance programs around greater Nashville than in mostof the other markets in this study, those available are country music to the ears of buyers. That’s because the area hasthe lowest median listingprice of all of the pricey metros on our list. Some of the most generous help comes from the Down Payment Assistance Program, which offers up to $35,000 for down payment and closing costs in Davidson County.
9. Dallas, TX
Median home price:$325,000
Median down payment: $20,950
Average down payment assistance: $12,876
Dallas is second only to the Washington, DC, area when it comes to the sheer numberof programs available. Those who work ineducation, law enforcement, and health care are eligible for up to5% of their first mortgage through the Homes for Texas Heroes program or other similar, local assistance programs. The grant is designed to help with down payment and closing costs. And it can add up to quite a chunk of change.
10. Portland, OR
Median home price: $420,000
Median down payment: $20,950
Average down payment assistance: $12,389
The Pacific Northwest is positively green with cash to help first-time buyers. One of the best resources is the Portland Housing Bureau, which offers a 0%, deferred Down Payment Assistance Loan for up to $40,000. The loan is good on homes priced up to $506,000. (That might not get buyers too far within the expensive city limits, but it can stretch quite a bit farther in the surrounding suburbs.) That could cover your entire down payment and then some.
