Buying your first home? A new down payment program could help
The Nevada Housing Division and the Nevada Rural Housing Authority received $10 million to help first-time homebuyers.
Updated February 8, 2023 - 7:54 pm
A new down payment assistance program, funded through the American Rescue Plan, is expected to assist hundreds of Nevada families looking to purchase a home.
The Nevada Housing Division and Nevada Rural Housing Authority recently received $10 million to offer down payment assistance to first-time homebuyers, with $7.5 million allocated for the Nevada Housing Division and $2.5 million for the Nevada Rural Housing Authority.
The help will come in the form of a $15,000 second mortgage with no payments or interest that will be forgiven after the homeowner resides in the house for three years, according to Dwight Pace, homebuyer programs supervisor for the NHD.
He estimates more than 650 families will be helped by the additional funding, and that it would take 12-18 months to allocate the funds.
Pace said the assistance is only available to first-time homebuyers or those who haven’t owned a home within the past three years and have a minimum of six months of Nevada residency.
“We have a lot of people moving into Nevada,” Pace said. “We wanted to make sure this is state money that we tried to get to actual Nevada residents.”
The NHD program launched in November, while the Nevada Rural Housing Authority’s assistance program launched in December.
Haya Kessler, real estate agent and team leader with Brodkin Group at Realty One Group, said the program could be “substantial” for first-time homebuyers since it allows more flexibility when making an offer on a home.
“For people that want to buy a home, especially a lot of the first-time homebuyers that have been renting, they don’t have a lot of cash,” Kessler said. “To be able to get that down payment assistance for the purchase of their home is huge.”
Pace said there is an annual income restriction to the program, noting that it is limited to people who make within 300 percent of the federal poverty level, meaning a single person would need to have an income of $40,770 or less. But Pace said larger families have a higher income threshold, such as $97,410 for a family of five.
“This program, while it’s going to be beneficial, is going to be challenging for a lot of first-time homebuyers because of those income restrictions,” Pace said. “It’s very difficult with a $40,700 annual income to buy a home in Clark County or Washoe County or anywhere in the state. It’s obviously helping families with four, five, six, seven people in the household. It’s much easier to qualify income-wise for the assistance and a mortgage.”
In 2021, the median down payment for a first-time homebuyer was 6 percent of the home’s purchase price, according to the National Association of Realtors. This means a home would need to be valued at $250,000 for a $15,000 down payment to cover 6 percent of the home’s price. But the down payment assistance can be bundled on top of other existing payment assistance options, according to Pace.
This program “gives lenders options,” he said. “It’s just another tool for them to use as they’re helping homebuyers.”
Kessler said it also allows first-time buyers to overcome the common hurdle of a lack of savings in order to access homeownership.
“The biggest problem for a lot of people that are renting is not that they cannot pay their monthly payment. It is that they don’t have money to put in the down payment and closing cost. So getting that assistance of $15,000 is huge,” Kessler said.
A 2022 NAR report found that between 27 percent and 32 percent of potential homebuyers cited difficulty saving for a down payment as an obstacle to purchasing a home. The report also found 75 percent of potential homebuyers are either currently building up their savings or plan to use savings for a down payment, and these homebuyers expect to save for anywhere from six months to three years.
Interested applicants can visit the Nevada Housing Division’s website at homeispossiblenv.org and the Nevada Rural Housing Authority’s website at nvrural.org.
Contact Sean Hemmersmeier at firstname.lastname@example.org. Follow @seanhemmers34 on Twitter.