You don’t have to deplete your savings to buy a home. With down payment assistance, Idaho Housing can get you into a home sooner with money leftover to make your new house a home.
First time home buyer? Learn how to buy your first home here
How Down Payment Assistance Works
When you buy a home, you are required to pay a down payment. A down payment is a contribution toward the purchase of your home that you pay upfront, before moving in. The minimum down payment you need depends on the type of mortgage you’re using to buy your home, but typically ranges between 3% and 3.5% of the sales price of the home. Many aspiring homebuyers struggle to save a 3% down payment, especially as rising home prices in Idaho push that amount into the tens of thousands.
Enter: down payment assistance!
Idaho Housing’s down payment assistance program eases the upfront financial cost of buying a home and allows you to start building generational wealth sooner. This program provides homebuyers up to 10% of the sales price of the home to use towards the down payment and/or closing costs. Idahoans who use this program can contribute as little as 0.5% of the sales price of their own funds to the purchase.
Down Payment Assistance Example:
If you want to buy a $400,000 home using an Idaho Housing conventional loan, the minimum down payment you would need to provide out-of-pocket is $12,000 (3.0% of $400,000).
If you used down payment assistance through Idaho Housing, you would only need to provide $2,000 of your own funds towards the purchase (0.5% of $400,000). Idaho Housing would provide the additional financing needed.
- NOTE: 0.5% is the minimum contribution of your own funds you would need to provide. Some homebuyers elect to contribute more than the minimum. Your mortgage lender will help you
determine what is best for your situation.
The additional financing is loaned to you via a second mortgage or a forgivable loan.
- Second mortgages are paid back alongside your primary mortgage through small monthly payments. Idaho Housing offers second mortgages at a fixed interest rate of 7% over 15 years. Spreading the second mortgage out over multiple years makes the additional monthly payments affordable and sustainable.
- A forgivable loan is assistance in the form of a zero-interest loan that is gradually forgiven overtime. Based on how much down payment assistance you need, the interest rate on your
primary mortgage will increase (0.125% interest rate increase for every 0.5% of forgivable loan used).
Why should I consider down payment assistance?
Who is eligible for down payment assistance?
To be eligible, a buyer must have:
- A household income at or below $150,000. Some loan programs require lower income.
- Take Finally Home! Homebuyer Education.
Who is down payment assistance best for?
- You have enough for a 3% down payment, but it would completely drain your savings.
- You have a secure, well-paying job, but saving all the way up to a 3% down payment is challenging.
Down payment assistance might not be right for you if:
- You’re not ready for the responsibility of homeownership.
- You wouldn’t have any money left in savings after your purchase, even with down payment assistance.