time-iconFri Jul 08 2022

First Time Home Buyers Could Receive Up to $25,000 in Down Payment Assistance Through Biden's Downpayment Toward Equity Act

Wondering how to afford your first home? The Downpayment Toward Equity Act, which was introduced by President Biden, is designed to help qualified first-time homebuyers achieve their dreams of homeownership by providing up to $25,000 in down payment assistance. First-time homebuyers could also be eligible for additional funds under the Housing Trust Fund program and other state programs. Read on to learn about the Downpayment Toward Equity Act and how it can make buying your first home easier and less expensive!

What Is The Biden’s Downpayment Assistance Act?

The Downpayment Assistance Act is a new bill that was recently proposed by President Biden. This act offers up to $25,000 in down payment assistance for eligible homebuyers. To be eligible, homebuyers must be first-time buyers (or have not owned a home in the last three years) and also considered first-generation buyers. This down payment assistance could help many Utah families achieve their dream of homeownership.

As of July 8, 2022, the $25,000 first-time home buyer grant remains a bill. There are versions in discussions within the House and also the Senate. Rep. Maxine Waters authored the House version of the bill, which has 64 co-sponsors. Senator Raphael Warnock authored the Senate version of the bill, which has six co-sponsors.

Eligible home buyers can use the money as they please.If you purchase a home for $100,000, the $25,000 cash grant can be split into a large down payment, a lump sum for your closing costs, and extra cash to buy down your mortgage interest rate.

Here Are Some Key Details

The bill’s timeline is:

July 17, 2021: H.R. 4495 introduced in the House of Representatives as Downpayment Toward Equity Act of 2021

September 30, 2021: S. 2920 introduced in the Senate as Downpayment Toward Equity Act of 2021

February 10, 2022: Hearings held in Senate

June 22, 2022: Hearings held in SenateThese grant funds for home buyers are unavailable until the House or Senate version of the bill are passed and signed into law.

According to the National Association of Realtors, the average price of a home in the U.S. is $272,900. The median price of a home in Utah is $349,900. So, a first-time homebuyer in Utah could potentially receive up to $25,000 in down payment assistance through this act. There are other government home buying grants available as well that can help with things like closing costs or down payments.

ShowmeRebates.com also shows you available cash back rebates for every home that is listed for sale. These rebates can be used for closing costs, to reduce the interest rate through rate buy-downs, or help reduce the purchase price of the home.

Are There Any Limitations?

Qualifying homebuyers will receive up to $25,000 in assistance in the form of a down payment. Eligible homebuyers must be first-time homebuyers (or have not owned a home in the last three years) and also are considered first-generation homebuyers. One type of first-generation homebuyer is a person whose parents never owned a home during his or her lifetime and don't currently own a home.

As per the Housing and Economic Development and passage of the Downpayment Toward Equity Act, buyers of homes must take a government-approved homeownership education course. The class can be completed in a short amount of time and is proven to reduce mortgage default rates.

Who Qualifies For This Tax Credit?

To qualify for the tax credit, you must be a first-time homebuyer or have not owned a home in the last three years. You must also be considered a first-generation homebuyer. In addition, the home you purchase must be your primary residence.

To qualify for the grant, home buyers must earn no more than 20 percent over the median income of their metropolitan area. For instance, in Portland, Maine, where the median income is $60,000, home buyers must earn $72,000 or less each year. If the home buyer is eligible in a high-cost area, such as New York, Los Angeles or another city with a high cost of living, the home buyer must earn no more than 80 percent of the local median income. In San Francisco, home buyers must earn $189,000 per year or less to qualify.

The mortgage must be backed by one of these five government mortgage agencies - Fannie Mae, Freddie Mac, FHA, VA, or USDA. USDA and VA require no down payment, Fannie Mae and Freddie Mac require 3 percent and FHA requires 3.5 percent. The program excludes jumbo mortgages as well as other non-qualifying mortgage loans.