Down Payment Strategies for First-Time Homebuyers in the Southeast

The idea of buying a home is exciting. However, coming up with a sizable down payment can remove some of the joy from the process.

According to the National Association of Realtors, the November 2022 median home price in the U.S. is approximately $370,000.

The traditional 10 or 20 percent down payment for even an average-priced home would require substantial savings. Fortunately, there are options available to help first-time home buyers obtain the goal of homeownership, and for qualified borrowers, this includes loans with reduced or no down payment requirements, and down payment assistance loans that may be forgiven after a certain number of years.

SouthState Buyer’s Advantage Loan

One available SouthState mortgage offering is the Buyer’s Advantage program. Through this program, qualified borrowers can receive up to 100 percent financing with no down payment required. Additionally, no Private Mortgage Insurance (PMI) is required.

SouthState Community Advantage

SouthState is also proud to offer Community Advantage, a lending program designed to make homeownership more accessible for first-time buyers. This program offers up to 100 percent financing with no PMI required. Borrowers must have a 600 minimum credit score and meet income eligibility requirements. Home must be located in select counties in Alabama, Georgia, Florida, North Carolina, South Carolina and Virginia.

SouthState Opportunity Advantage Loan Fund

Developed to help homebuyers overcome financial barriers to homeownership, the Opportunity Advantage Loan is a forgivable second mortgage. Applicants are eligible for a 0-percent interest, zero-payment second mortgage of up to $5,000 to put toward a down payment, closing costs or other fees. The loan is forgivable with no repayment if you own the home for five years.

Borrowers must have a 640 minimum credit score and meet income eligibility requirements. The loan must also be combined with a HomeReady®, Home Possible® or Community Advantage mortgage.

Government-backed Mortgage Loans

SouthState also gives it borrowers access to three government-funded programs that offer home buyers the option of a lower down payment:
 

Veteran Administration Loans:

The VA offers loans to qualified active duty and veterans who meet specific military service requirements. These loans have limited closing costs, competitively low interest rates, and grant the ability to purchase a home with no money down.
 

Federal Housing Authority Loans:

FHA loans can be ideal for certain qualifying homebuyers with a down payment as low as 3.5% of the purchase price.
 

US Department of Agriculture Loans:

The USDA offers loans to qualified borrowers to purchase homes in designated rural areas with no down payment required.
 

Down Payment Assistance Programs

Across the Southeast, there are also assistance programs that can help qualified individuals secure a down payment by obtaining a small dollar second lien loan to supplement their primary mortgage loan. Many of these programs occur on the state and local level, combining grants, zero-interest loans, and a combination of tax benefits and low-interest rates.

According to Down Payment Resource’s latest report, down payment assistance loans nationwide are:

• 86% deferred payment
• 58% forgivable loans
• 52% forgivable loans with deferred payments

SouthState works with many state and local down payment assistance providers in our six-state footprint. Each provider has its own specific qualification requirements which may include: a maximum sales price, borrower income limits, minimum credit scores, or requirements to attend homebuying counseling. While many programs are intended to serve first-time homebuyers, some may grant loans to a buyer who has not owned and occupied a primary residence within the past three years.

We’ve provided a list to guide your search, but terms are subject to change so please contact a mortgage banker or visit the program’s website to determine if you qualify for any of the programs.
 

Down Payment Assistance Programs in Alabama

Statewide programs

• Alabama Housing Finance Authority

Area-specific programs

• City of Opelika Home Buyers Loan Program

Down Payment Assistance Programs in Georgia

Statewide programs

• Georgia Dream

Area-specific programs

• Atlanta Housing Authority
• Augusta’s Homeownership Assistance Program
• Savannah DreamMaker Home Purchase Assistance

 

Down Payment Assistance Programs in North Carolina

Statewide programs

• North Carolina Housing Finance Agency

Area-specific programs

• House Charlotte
• City of Gastonia Homebuyers Assistance Program
• DreamKey Partners down payment assistance in Cabarrus, Gaston, Mecklenburg, Rowan and Union counties

Down Payment Assistance Programs in South Carolina

Statewide programs

• Palmetto Home Advantage (part of SC Housing)
• SC Housing Homebuyer Program

Area-specific programs

• Community Works in Greenville County only
• City of Florence Home Ownership Assistance Program

Down Payment Assistance Programs in Florida

Statewide programs

• Florida Housing Finance Corporation
• Hometown Heroes

Area-specific programs

• Home Sweet Home Hillsborough Project (Hillsborough County Housing Finance Authority)
• Hillsborough Mortgage Credit Certificate Program (Hillsborough County Housing Finance Authority)
• Lee County Housing Finance Authority Own a Home Opportunity
• Housing Finance Authority of Manatee County Home Ownership Program
• Miami-Dade County Affordable Homeownership Program
• Pinellas County Down Payment Assistance Program
• Approved State Housing Initiatives Partnership (SHIP) programs in City of Gainesville, Manatee County (except the city of Bradenton), Monroe County, Okeechobee County, Orange County, Escambia County/City of Pensacola, and Seminole County.

Other Southeast region programs

SouthState also works with nationwide loan assistance programs that cover Virginia and Alabama, in addition to the states previously listed above.

The Federal Home Loan Bank Atlanta annually funds two loan assistance programs that may be accessible to homebuyers in SouthState’s footprint.

• The Community Partners Product provides up to $10,000 in down payment and closing cost funding to current or retired law enforcement officers, educators, health care workers, firefighters, and other first responders; veterans or active-duty members of the U.S. military or their surviving spouse; and COVID-related essential workers that are first-time homebuyers or non-first-time homebuyers.
• The First-Time Homebuyer Product provides up to $7,500 in funds for the down payments and closing costs.

In summary, putting down 20 percent on a home you desire isn’t always possible. If you are struggling to find the funds for the required down payment, there may be loan options and assistance programs available to help. They include federal government-backed loans, bank loan programs, and state and local down payment assistance programs.

To discuss and determine the right product for you, contact one of our Mortgage Bankers.


About the Author: Hatton Valentine has 31 years in the mortgage business, with experience in both sales and operations. He currently leads SouthState’s product development.