Phil Aitken
Phil Aitken
Owner/Broker

What Are Typical Down Payments and Closing Costs for Homebuyers?

Starting the homebuying journey is an exciting yet financially significant milestone. Among the crucial aspects to navigate are down payments and closing costs – two essential components that can substantially impact your overall investment. In this guide, Phil Aitken and the real estate experts at Your Home Sold Guaranteed Realty - Phil Aitken Home Team break down these key elements to equip you with the knowledge needed to make informed decisions.

Key Takeaways

  • Understand the importance of a down payment and its impact on avoiding private mortgage insurance (PMI).
  • Budget for closing costs, which can range from 2% to 5% of the home’s purchase price and cover various fees and expenses.
  • Explore down payment assistance programs offered by federal, state, local, or non-profit organizations if you need financial support for the upfront costs.
  • Be prepared to provide documentation and meet specific eligibility criteria when applying for down payment assistance programs.

How much is required for a down payment (typically 20% to avoid private mortgage insurance)?

The down payment is the initial sum of money you’ll pay upfront when purchasing a home. Traditionally, lenders have required a minimum down payment of 20% of the home’s purchase price to avoid the additional cost of private mortgage insurance (PMI). PMI is a type of insurance that protects the lender in case you default on your loan payments.

However, it’s important to note that a 20% down payment is not a hard-and-fast rule. Many lenders offer mortgage programs that allow for lower down payment amounts, ranging from as little as 3% to 10%. These options can be particularly attractive for first-time homebuyers or those with limited savings.

What are the estimated closing costs, and what do they cover?

Closing costs are the additional fees and expenses associated with finalizing the home purchase transaction. These costs can vary depending on the location, lender, and specifics of your loan, but typically range from 2% to 5% of the home’s purchase price.

  • Closing costs can cover a variety of items, including:
  • Lender fees (origination, underwriting, and processing fees)
  • Appraisal fees
  • Title search and insurance
  • Recording fees
  • Prepaid property taxes and homeowners insurance premiums

While closing costs may seem like a significant upfront expense, it’s essential to factor them into your overall budget when purchasing a home.

Are there any down payment assistance programs available?

For prospective homebuyers who may struggle to come up with the necessary down payment funds, there are several down payment assistance programs available. These programs can provide financial assistance in the form of grants, low-interest loans, or tax credits, helping to make homeownership more accessible.

Some common down payment assistance programs include:

  • Federal and state government programs (e.g., FHA, VA, USDA)
  • Local housing authority initiatives
  • Employer-sponsored programs
  • Non-profit organization grants

Eligibility requirements and the amount of assistance provided can vary, so it’s essential to research the options available in your area and determine if you qualify.

What is the Boost Down Payment Assistance (DPA) Program?

Your Home Sold Guaranteed Realty - Phil Aitken Home Team. What Are Typical Down Payments and Closing Costs for Homebuyers?

With access to over 220 lenders that have hundreds of loan products, these lenders compete for your business. This includes down payment assistance programs.

The Boost DPA program (Down Payment Assistance) is a comprehensive initiative that provides financial assistance to eligible homebuyers, helping them secure the necessary funds for a down payment and closing costs.

Here are some highlights that make this DPA program stand out:

Refinancing Flexibility:

One of the standout features of the Boost DPA program is its refinancing flexibility. Homebuyers can refinance their mortgage just six months after the initial purchase, allowing them to take advantage of improved financial conditions or lower interest rates much sooner than with many other programs.

Buydown Options:

The program supports interest rate buydowns, including 1/0 and 2/1 buydowns. This feature means that homebuyers can enjoy lower initial monthly payments, making homeownership more accessible from the start.

Repayable and Forgivable Options:

The Boost DPA program offers two distinct options for down payment assistance:

  • Repayable Option: This option provides down payment assistance that can be repaid over 15 years, offering a structured repayment plan without immediate financial burden.
  • Forgivable Option: With this option, the down payment assistance converts into a grant that does not need to be repaid if the borrower stays in the home and continues to meet certain conditions over a specified period.

Seller and Builder Concessions:

The program allows for seller or builder concessions, which can be used to cover closing costs or buydowns, further reducing the initial amount that a buyer needs to bring to closing.

Wide Property Eligibility:

Eligible properties under the Boost DPA program include 1-4 unit homes, condos, townhomes, and even double-wide manufactured homes. This inclusivity ensures a broad range of housing options for applicants.

No First-Time Homebuyer Requirement:

Unlike some other down payment assistance programs, the Boost DPA is available to both first-time and repeat buyers, making it an excellent option for anyone looking to purchase a home in Jacksonville, regardless of their previous homeownership status.

Comprehensive Underwriting Flexibility:

While adhering to FHA and USDA guidelines, the Boost DPA offers added flexibility in underwriting, making it easier for borrowers with unique financial backgrounds to qualify.

Low Minimum Credit Score Requirement:

With a minimum credit score requirement as low as 580 for FHA loans, the Boost DPA program is accessible to a wider audience, especially those working on building their credit.

No Income Restrictions:

There are no strict income restrictions, allowing individuals and families with varying income levels to potentially qualify for the program, provided they meet other financial criteria.

By leveraging the Boost DPA program, Jacksonville residents can overcome one of the most significant barriers to homeownership – the down payment. With its flexible options, comprehensive eligibility criteria, and financial assistance, this program empowers more individuals and families to make their homeownership dreams a reality.

To Discuss Your Home Sale or Purchase, Call or Text Today and Start Packing!

Down Payments and Closing Costs for Homebuyers Final Thoughts

By being well-informed about down payments, closing costs, and available assistance programs, you can better prepare for the financial commitments involved in the homebuying process. Remember, the more knowledge you have, the more empowered you’ll be to make sound decisions that align with your unique circumstances and long-term goals.

Call Phil Aitken To Start Your Mortgage Loan Process

Your Home Sold Guaranteed Realty - Phil Aitken Home Team. What Are Typical Down Payments and Closing Costs for Homebuyers?
Phil Aitken

Are you ready to begin the exciting journey of homeownership in Jacksonville? Don’t let the hurdle of a down payment hold you back any longer. The Boost DPA program, combined with Phil Aitken’s expertise, offers an unparalleled opportunity to make your dreams a reality. With a faster, cheaper, and easier mortgage loan process, you can confidently take the first step toward owning your dream home. 

Faster

  • Get pre-approved in minutes.
  • Closings on average in 20 days or less.

Cheaper

  • 1% and 3% down options.
  • Borrower Assistance Programs
  • Savings that average over $9,400 versus large banks and retail lenders

Easier

  • User-friendly technology allows you to track the status of your loan throughout the mortgage loan process

Call or text Phil Aitken today at (904) 544-5252 and discover how the Boost DPA program can unlock the door to homeownership in Jacksonville. Phil’s team of professionals will guide you through every step, ensuring a seamless and stress-free mortgage loan process and experience. Don’t wait – call now and start building your future as a proud homeowner in the vibrant city of Jacksonville.

To Discuss Your Home Sale or Purchase, Call or Text Today and Start Packing!

Phil Aitken, Owner/Broker
Phil Aitken is the Owner/Broker with Your Home Sold Guaranteed Realty - Phil Aitken Home Team and has over 13 years of Real Estate experience. Phil’s faith and desire for his family’s continued security fuel his business growth and leadership. The Phil Aitken Home Team continues to profoundly impact the people of Jacksonville via supporting several faith-based organizations. Phil gives back a portion of every real estate transaction to The Tim Tebow Foundation and Rethreaded. Find Phil's full story here.