As a Realtor working with a handful of First Time Buyers at any given time, I am often faced with the challenge of helping people overcome their fears. I don’t know why buying your first home seems so scary but I do remember being in the same predicament so I can empathize. Maybe it is the unknown, the fear of not being able to afford the home and having the back foreclose on it or not being able to come up with the down-payment, the commitment, the maintenance…who knows! Maybe it is a combination of all of these things but the fact remains: if you can afford rent, you can’t afford not to buy. Interest rates are super duper low. I am doubtful that I will ever see rates like this again in my lifetime.

There are options when it comes to money down. The first being down payment assistance (DPA) programs. I would like to point out that I do not claim to be an expert on the DPA programs so please touch base with your lender. A qualified lender should be able to provide ample information on currently available programs. If you need help selecting a lender I would be happy to point you in the right direction.

OHFA (Oklahoma Housing Finance Agency) offers several programs intended to assist with housing needs. They have programs specific to teachers, police and firemen, as well as those with AIDS. They also offer a general program which provides “below market interest rates” and DPA for qualified individuals. Bond money is released 2-3 times a year and a new round came out the first of this month. You will need to check out whether you fall in to the income and purchase price restrictions and whether you are looking in a targeted or non-targeted area. With so many constantly changing variables, the best way to determine your eligibility is to contact a participating lender or go directly to the source to find current info. While it says that they offer “below market interest rates”, the going rate for this assistance is at 6.1% and I just saw a buyer get approved for 5.00% last week so be sure that you see on paper the difference the interest rate will make on your monthly payment.

For example: On a home costing $100,000.00, your monthly principal and interest (P & I) payment at 5% would come out to $536.82. At 6.1%, it would be $605.99, a difference of $69.17. If you are receiving 3.5% back ($3,500.00) it would take approximately 4.23 years before you would have paid back the $3,500.00 through the difference in interest rates, at which point you have now started paying more than you would have if you had not gotten the bond money…and the kicker, they will probably require you to stay in the home for 5-7 years to avoid repayment so you have to determine if it is worthwhile to apply for this assistance or if you can come up with the money without it.

The Community Action Agency of Oklahoma City offers two different DPA programs that can be used with an FHA loan and will not impact your interest rate. However, the income restrictions are much more strict than those imposed by OHFA. If you buy in the target area (Neighborhood Revitlization Strategy Area), have not bought or sold in the past 6 months and meet the income restrictions, you are eligible for 6% of the purchase price, up to $6,000.00 toward down payment and closing costs. if you are selling one home and purchasing another in the NRSA area, you may still qualify for $3,500.00 toward closing. There is also a second program that offers up to $3,500.00 back in the Low/Mod outside areas. Home must be owner occupied or vacant for 6 months prior. It cannot be a rental, unless it was rented to you. You must attend a home-buyers education workshop prior to closing, provide 1% of the sales price and occupy the purchased property for 5 years, per the terms of the agreement. Please call Jackie Baker at (405) 232-0199 x3201 for more information on Community Action Programs.

This money is in addition to the Federal Tax Credit available to First Time Buyer’s. Please seek the advice of your lender or the staff at one of these agencies for a more in-depth explanation of requirements and implications. I have also been asked on several occasions about bridge loans. They are not available in Oklahoma. There was a premature announcement earlier in the year saying that Oklahoma would provide down payment assistance against the tax credit money to be returned but it was quickly retracted. The only way you will get any of your $8,000.00 tax credit in advance is if you ask your employer to withhold less of your paycheck.

The last option is to be gifted the money. If your parents or a friend want to gift you the money for a down payment your lender will have a gift letter drawn up for them to sign and will probably verify the funds with the person giving you the money.