Down Payment Resource (DPR), offering homebuyer assistance program data and solutions, reports that homebuyer assistance program administrators are responding to the mounting home affordability crisis by rapidly rolling out new homebuyer assistance programs and funding buydowns.
There are now 2,256 homebuyer assistance programs available to help people affordably finance homes, an increase of 54 programs over the previous quarter, according to DPR’s third quarter 2023 Homeownership Program Index report.
“Most first-time homebuyers are well aware that interest rates are hitting generational highs and affordability is in the gutter – but what they are not hearing is that there are 2,256 homebuyer assistance programs available to help,” says Rob Chrane, founder and CEO of Down Payment Resource, in a release. “Program providers are working around the clock to ensure the programs they offer meet the needs of their markets. For this reason, many programs now allow funds to be used for buydowns and other popular financing strategies that take the edge off of monthly mortgage payments.”
In its review of the 2,256 homebuyer assistance programs that were active as of October 25, DPR found that 295 programs will fund buydowns, which allow borrowers to lower their interest rates by paying an upfront fee. They have become a popular financing strategy as interest rates have surged.
Of those, 253 will fund permanent buydowns, which allow borrowers to lower the interest rate over the life of the mortgage loan by paying an upfront fee. More than 11% of programs support these buydowns.
Sixty-six programs will fund temporary buydowns, which allow borrowers to lower their interest rates for a defined number of years at the beginning of the loan by paying an upfront fee.
Of the homebuyer assistance programs reviewed, 224 will fund certain upfront loan fees. Nearly 10% of programs allow funds to be used to pay the upfront mortgage insurance premium (UFMIP) on FHA loans, the funding fee on VA loans and the guarantee fees on USDA loans.
Seventy-one programs will fund mortgage insurance (MI) buydowns, which allow funds to be used to lower monthly MI premiums, DPR says.