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As you're aware, saving for a down payment is one of the biggest obstacles to homeownership. But according to a National Association of Realtors® survey, 74% of first-time homebuyers put less than 20% down.^Footnote1 This should come as encouraging news to any client who's looking to purchase their first home.

The idea of the American dream including homeownership is so strong that lenders, government agencies and some large employers are willing to do their part — by offering down payments as low as 3% — to help make owning a home a reality.

To put this in perspective, on a median-priced home of $315,000,^Footnote2 the difference between a 3% and 20% down payment is over $53,500!

Down payment assistance through the public sector

The following government agencies partner with commercial lenders to create favorable home buying terms.

• The Federal Housing Administration (FHA) collaborates with lenders to help the homebuyer get approved for a loan by guaranteeing a portion of the loan's balance.^Footnote3 This includes reducing the down payment to as low as 3.5%.
• Fannie Mae and Freddie Mac — government-sponsored companies — work with private lenders to offer down payments as low as 3% and, in some cases, no down payment at all.
• The Department of Veterans Affairs offers assistance to active and retired military service members. Veterans may qualify for down payments as low as 0%.^Footnote4

Additionally, through some state and local housing agencies, municipalities and nonprofit organizations, down payment assistance programs are available.

Support through commercial lenders

Many private lenders look to help first-time homebuyers by providing direct down payment assistance. Of course, private mortgage insurance (PMI) may be required on loans with down payments of less than 20%.

The following loan assistance programs, provided through Bank of America's Community Homeownership Commitment™, serve as examples of the help that may be available to your client.

• Down Payment Grant^Footnote5 Program offers a grant of up to 3% of the home purchase price — up to $10,000 (whichever is less) toward a down payment. These funds do not need to be repaid. Available only in select markets; visit Bank of America Down Payment Center to learn more.
• Affordable Loan Solution® mortgage,^Footnote6 designed for homebuyers whose household income cannot exceed their 100% Area Median Income, is a fixed-rate loan with a down payment as low as 3% and no PMI.

The good news is that down payment assistance is readily available. By helping your client weigh their goals with their ability to save for a down payment, they'll be able to determine their best course of action.