The Truth About Down Payment Assistance and What To Do About It

I meet a lot of people interested in Down Payment Assistance programs but don’t know where to start.  Here is the truth about down payment assistance and what to do about it.  Down payment assistance is a lot like communism. It’s great in theory for a small number of people but it doesn’t really work that well for the masses.  I think this is especially true in markets like San Diego.  Here are a few reasons why you may struggle to get DPA here in America’s Finest City:
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  1. You are a first-time home buyer.  All DPA-eligible borrowers are entry-level buyers.  In the San Diego market that means buying properties at prices of 300k or less which most often means buying a condo.  The most commonly used first-loan option when pursuing DPA is FHA financing which means you must buy a condo within an FHA approved complex.  Those are hard to come by here in San Diego.
  2. You make too much money.  At prices higher than 300k the borrowers income will often times exceed the DPA program’s income limits which means the level of income you need to qualify for the first mortgage is also an amount that exceeds the DPA program guidelines.  This happens all the time.
  3. This is a seller’s market.  It’s hard enough getting offers accepted when financing terms are strong.  Tell a seller you are financing 99-100% and need 45 days and your offer won’t even get looked at.  You might be asking why it takes 45 days to close?  Well, banks offer the financing but the city/county/state government entity offers the DPA.  What that means is you have a for-profit bank that understands the marketplace and has a vested interest in closing in 30 days but you need the non-profit government entity in charge of approving the DPA/grant/assistance to meet that same time frame and the only sense of urgency they have is milking the clock.  Just think if the government offered the actual loan for FHA financing.  It would be a nightmare trying to get an approval from Washington DC.  They are smart to let the bank process the loans.

There are other reasons as well but I think you get the point.  So, what should you do?  And why pursue DPA programs if you have to climb such a high mountain to get it?  Because no loan option should be left off the table and if you work with the right team who is willing to scour the earth for the right DPA to help finance the right house owned by a motivated seller the upside is enormous.   

Start putting your team together by clicking on my name below which will send me a message to find out for which DPA’s you specifically qualify.

By David Hughson

Fearless DPA Advocate

858-863-0264

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