• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Sonoma County Mortgages

Contact Us About Mortgage Financing

All financing provided by New American Funding

(707) 217-4000 | Prequalify Now

Search Sonoma County Mortgages

  • Home
  • Purchase
    • How Much Down Payment To Buy A Home?
    • How Much Income You Need To Buy A Home
    • How Much Should I Save For Buying A Home?
      • How Rates Affect Payment
    • No PMI Mortgages
    • FHA Loans
    • Sonoma County Disaster Loans
    • Jumbo Loans
  • Refinance
    • Mortgage Rates
    • Does It Make Sense To Refinance?
      • Get Your Refi Paperwork In Order
    • How To Pay Off Your Loan Faster
    • How To Remove PMI
    • How Lenders Price & Quote Loans
  • Loan Programs
  • Payment Calculator
    • Mortgage Affordability Calculator
  • Blog
  • Videos
  • About SCM
  • About Scott Sheldon

Primary Sidebar

Sonoma County Mortgages is a part of New American Funding

New American Funding - NMLS #6606

Get Your Latest Rate Quote Now!

Is a down payment assistance loan to buy a home a good idea?

February 12, 2023 by Scott Sheldon

Share on Facebook Share on Twitter Share on Pinterest Share on LinkedIn Share on Email
is a down payment assistance loan a good idea?

For those looking to purchase real estate particularly first-time home buyers, the notion of a down payment assistance loan where you need very little or no money to close escrow could be a very attractive option. Here are some things to consider if you’re evaluating a low or down-payment mortgage loan… 

Down payment assistance loans have become very popular particularly in the last 6 months since interest rates started rising significantly in the summer of 2022. Prior to this getting a purchase offer contract accepted on a down payment assistance loan used to be very difficult because, in the eyes of the seller, a down payment assistance loan might not seem as strong of an offer as someone putting in a down payment on a traditional financing type scenario.

So only recently have we seen a resurgence of DAP loans in the marketplace. Down payment assistance loans want

  • 45% debt-to-income ratio
  • good job/income
  • 620 or higher credit score

Should you buy a house without a down payment? That’s truly the big question, well if you have stocks bonds Ira 401K you may want to keep in the bank for tax planning purposes and you want to buy a home with very little down and you can afford the mortgage payment, one might argue yes on a fixed rate mortgage loan, it could be a good idea if you have a buy and hold strategy with those elements in place. Of course, your income is stable to rising in the future.

As we share this information in 2023 with the average 30-year fixed rate mortgage being around mid- 5’s for this type of loan it’s realistic you might be able to refinance in the next 12 months. A good goal would be to lower your payments by $200- $400 a month or more in the future. In other words, over the course of time, your home affordability in terms of expenses gets bigger if your expenses get lower and your income remains the same or if your income goes up that’s an excellent position to be in financially because it will give you and your family the ability to save money and/or perhaps if you choose to prepay your mortgage and reduce the interest expense on the loan and pay off the house faster.

If your scenario is such that you’re a DAP  loan and you’re going to turn around and sell that house relatively quickly say in a year you might want to rethink that strategy as real estate typically takes time to appreciate. So if you factor in all of those elements versus the prospect of renting the home or waiting to see what the market does which no one knows, at some point, you have to make the decision can I afford this if the answer is yes and you have a long term strategy in place and you’re feeling optimistic about your finances, it generally makes sense to purchase a home concerning it’s on a fixed rate mortgage. If you’re thinking about buying a home or just want to get some more information to see what a long-term plan might look like since most people these days are not in a rush to do anything start today by getting a complimentary mortgage rate quote.

Related Mortgage Advice from Scott Sheldon

  • THE REALITY OF DOWN PAYMENT ASSISTANCE
    Is down payment assistance worth it to a buy a home?

    If you're looking to buy a house with little or no cash your options may…

  • fannie mae debt to income ratio change
    Can You Borrow A Down Payment To Buy A Home ?

    Planning to buy a home sometime soon? If you're working on the down payment, know…

  • 5 Ways To Buy A Home

    With more home buyers entering the market, competition increasing, driving  prices in most pocket areas…

  • how to write killer offer letter
    How Much Down Payment Percent You Need To Buy A Home

    Consumers looking into the possibility of buying a home should know you need less money…

Filed Under: Uncategorized Tagged With: best mortgage, buying a house, down payment, down payment assistance, FHA Loans, home buying, mortgage rate quote, preapproval to buy a home, qualifying for a mortgage, Santa Rosa mortgage, Sonoma County Mortgage Rates

Get Sonoma County Mortgages News and Updates in Your Inbox

Footer

SCM on Facebook

SonomaCountyMortgages.com

Connect on Facebook

SCM On Instagram

Follow Sonoma County Mortgages on Instagram

Follow on Instagram

SCM on Zillow

Zillow Reviews for Scott Sheldon, New American Funding

See Reviews on Zillow

Location & Contact

Sonoma County Mortgages and New American Funding are an Equal Opportunity Housing Lender

Scott Sheldon, Senior Loan Officer
NMLS ID# 287389
2455 Bennett Valley Road C107
Santa Rosa, CA 95405
1-707-217-4000
View SCM Map | Email Us!

Map of Sonoma County Mortgages New American Financing Office

View Map on Google

Copyright 2010–2023 SonomaCountyMortgages.com · About Us · Sonoma County Loans · Privacy Policy · Terms Of Use · Legal · Site Map

NMLS Consumer Access © New American Funding. All rights Reserved. NMLS ID#6606.
Corporate Office 14511 Myford Road, Suite 100, Tustin, CA 92780. We at New American Funding take great pride in our customer service and make it our number one priority. We encourage you to contact us for complaint resolution or any post-closing questions you may have regarding the servicing of your loan. We strive to have your experience with New American Funding a stellar one. In the rare case that our service did not meet your expectations, please call our customer care hotline at 1-800- 450-2010, ext. 7100 or you may contact us by email customerservice@nafinc.com. Please leave a detailed message and we will follow up with you no later than the end of the next business day. If you are using a screen reader or other auxiliary aid and are having problems using this website, please call 800-450-2010 Ext. 7100 for assistance.

State Licensing (Opens in New Window) | Privacy (Opens in New Window)
Terms of Use (Opens in New Window) | Electronic Consent Agreement (Opens in New Window)
Opens in new window Opens an external site Opens an external site in a new window