Home buyers will now have easier access to down payment assistance programs, Freddie Mac says

“Time and again research reveals that the down payment is the single largest hurdle first-time home-buyers need to overcome to attain homeownership. But finding and comparing the many programs and their guidelines is challenging,” Sonu Mittal, senior vice president of Single-Family Acquisition, told MarketWatch in an interview on the sidelines of the Mortgage Bankers’ Association’s annual conference in Philadelphia, Pa. 

According to data from Freddie Mac, the majority of qualifying home buyers receive over $6,000 in down payment assistance: 48% receive assistance between $6,000 to $8,999, and 27% receive over $9,000. 

Yet few take advantage of such programs. Freddie Mac found that between 2013 and 2016, the share of home buyers using down payment assistance programs doubled to 10% from 5%. But that’s still a small share of home buyers. Newer data was hard to find.

“If you’re buying a home, this [program] actually helps you to make sure you’re not leaving money on the table,” Mittal added.

“That’s the gap we are trying to close, is that when someone thinks about [buying], it can make sure that they’re taking advantage of what’s available, what they may qualify for, or what may be readily available,” he said.

The DPA One tool is designed to display to mortgage lenders and savvy home buyers to find down payment assistance programs across the country that they qualify for. 

The tool aggregates and showcases down payment assistance programs in one single standardized way, instead of the current fragmented system where the information is across various lenders’ websites. 

It is free, and requires lenders and counselors to key in their client’s eligibility parameters, and then access programs that match. Interested home buyers can also access the tool if they would like, Mittal said.

While information is available for 48 states, as of Monday, Texas and Minnesota will first gain full access to the tool, followed by California, Florida, Kentucky, and Virginia by the end of the year. In total, 48 states will have full access, which includes granular local-level data to the down payment assistance tool by Freddie Mac. 

The two states that won’t be able to offer the tool for now are Hawaii and Kansas, due to the way their state housing finance agencies are structured, but will be available next year.