How Down Payment Assistance Works in Oregon
For many people the dream of owning a home can be complicated by their ability to save for a down payment. In Oregon and most other states there are down payment assistance programs that can help.
What is down payment assistance?
Down payment assistance (DPA) programs provide funds to help to cover some or all of the down payment and/or closing costs to buy a house.
How do down payment assistance programs work?
Funding comes from the Oregon Housing and Community Services (OHCS) department as well as city and county government programs that aim to meet affordable housing needs. Types of closing costs and down payment assistance vary by program but common forms include:
- Grants. Some programs provide an outright gift of money.
- Zero-interest, forgivable loans. The loans are forgiven over a certain period. The money does not need to be repaid as long as the borrower still owns and live in the home after the period is over.
- Zero-interest, deferred-payment loans. Terms and conditions can vary based on the program but generally no payments on the down payment loan are due until the home is sold or if the borrower refinances the home or the mortgage reaches the end of the term.
- Low-interest loans. The loan must be repaid over a certain period, such as 10 years.
Who can get down payment assistance?
Eligibility vary from program to program. Some programs specialize in helping select groups, such as veteran/current service member, firefighter, educator, health care or law enforcement. Other programs prioritize applicants who receive low- and moderate-income.
Additional requirements often include taking a home-buyer education course, purchasing the house in an approved location, purchasing a house that is below the maximum purchase price, which is usually a percentage of the area’s median home purchase price.
Another requirement for a majority of programs requires that you be a first time home buyer. The U.S. Department of Housing and Urban Development (HUD) counts you are a first time home buyer if you have not owned a home in the last three years.
Where to start.
- Check out assistance programs offered by Oregon Housing and Community Services (OHCS).
- Check with your city and county to see if they offer any local down payment assistance programs for first-time home buyers. For example, the city of Springfield created the Springfield Home Ownership Program (SHOP) to encourage home ownership by assisting low-income residents. SHOP can loan up to $7000 toward the down payment and related costs of buying a home in Springfield.
- Visit the website of the local government or organization that is administering the program to learn about down payment assistance requirements and to get a list of approved mortgage lenders. The OHCS ‘s Find a Lender tool can help you find lenders in your area that specialize in first-time home buyer programs.
- Apply for a mortgage with a lender who is approved to work with the grant program. Local agencies may be able to recommend loan officers who have experience helping people apply for the grants they administer.