Buying a home can be challenging for many people, especially saving for a down payment and paying closing costs. However, if you want to buy a house in Kansas City, you're in luck.
Various assistance programs are available to help make homeownership a reality. This blog explains programs in Kansas City that help with down payments and closing costs. It covers eligibility and the application process.
Understanding Down Payment and Closing Costs
Let's start by discussing down payments and closing costs. These expenses can be significant hurdles for individuals trying to purchase a home. Many people find developing the necessary funds for these upfront costs challenging.
The Importance of Down Payments
The down payment is a portion of the home's purchase price that you pay upfront—a critical factor in securing a mortgage. Putting more money upfront can lead to better loan terms, like a lower interest rate and cheaper mortgage insurance. However, saving enough money for a down payment can be a significant barrier to homeownership.
What Are Closing Costs?
Closing costs are the various fees and expenses you pay to finalize the mortgage. They can include loan origination fees, appraisal fees, title insurance, and more. The costs usually range from 2% to 5% of the loan amount and must be paid at closing. This can increase the upfront cash needed to buy a home.
Kansas City Assistance Programs for Homebuyers
Kansas City offers a variety of programs designed to help homebuyers with their down payments and closing costs. Here’s an overview of some of the available options:
Down Payment and Closing Cost Assistance Programs
- The Missouri Housing Development Commission (MHDC)
The MHDC provides several homeownership programs, including down payment and closing cost assistance for qualified homebuyers. The "First Place" loan program offers cash assistance to first-time homebuyers, while the "Next Step" program is available to first-time and repeat homebuyers. This program is administered through approved lenders, like NASB.
- KansasDPA (Down Payment Assistance)
KansasDPA is a statewide program that can offer homebuyers up to percentage in down payment assistance through a grant. Qualifications include having a minimum credit score of 640 and meeting income and purchase price limits.
- NASB's Dream Possible Home Loan
NASB's Dream Possible Home Loan opens the door to homeownership by waiving the origination fee. Depending on your eligibility, this loan also offers either down payment or closing cost assistance, up to $6,500 off your amount due at closing.1 Program eligibility is restricted to properties in qualifying counties in the greater KC metro area in select census tracts or based on borrower income level.2 Available on conventional conforming, FHA, and VA purchases and refinances.
Housing Grants and Tax Credits
- Federal Home Loan Bank of Des Moines Home$tart Program
This program, offered through participating FHLB Des Moines member banks, provides grants for qualifying homebuyers that can be used toward down payment or closing costs. It's an excellent way for low-to-moderate income individuals and families to obtain additional funds for their home purchase.
- Mortgage Credit Certificate (MCC) Program
The MCC program, through MHDC, provides a federal tax credit for a portion of the mortgage interest paid each year, which can result in significant savings over the life of the loan.
Eligibility Requirements
Each assistance program has specific eligibility criteria that you must meet to qualify for aid. Income limits, credit score requirements, and homebuyer education courses are common factors. Some programs may also restrict the type of property you can purchase, make you eligible only for the program’s definition of ‘first-time homebuyer,’ or require you to occupy the home as your primary residence for a certain period. Specific grant programs may require a pro-rata payback of the grant should you refinance before a needed period.
How to Apply for Assistance Programs
Applying for down payment and closing cost assistance typically involves contacting the agency or a participating financial institution that administers the program. You may need to work with an approved lender or housing counselor to complete the application process. Gathering all necessary documentation, such as proof of income, employment verification, and credit reports, is essential to ensure a smooth application process.
Tips for Navigating Assistance Programs
Navigating down payment and closing cost assistance programs can be complex. Here are a few tips to help you along the way:
- Research Thoroughly - Take the time to research all the available programs to determine which ones you may qualify for and which offer the most benefit to your situation.
- Get Pre-Approved for a Mortgage - Getting pre-approved for a mortgage with the participating program lender can help you understand how much you can afford and may make you more attractive to sellers.
- Attend Homebuyer Education Courses – Seeking financial education on the lending process is essential and, in some cases, required for the down payment or closing cost assistance program they choose.
- Work with a Knowledgeable Real Estate Agent - A real estate agent familiar with local assistance programs can provide guidance and help you find a home that meets program requirements.
Conclusion
Homeownership is within reach, thanks to the variety of down payment and closing cost assistance programs available in Kansas City. By understanding the options and requirements, you can use these valuable resources to reduce the financial barriers to buying a home.
Remember to do your homework, consult with professionals, and leverage these programs to make your dream of owning a home a reality. With the proper preparation and support, you can navigate the homebuying process confidently and successfully.
Whether you're a first-time homebuyer or someone looking to re-enter the housing market, these assistance programs can provide the financial support you need to purchase a home in Kansas City. Start exploring your options today and take the next step toward becoming a homeowner.
1To qualify, the subject property must be located in a qualifying county, and either the applicant's income level must be less than 80% of the Area Median Income or the property must be located in a ‘low’ or ‘moderate’ income census tract. The Dream Possible Program is not available for all products or loan types. This program is not eligible for portfolio products. The program benefit in the form of down payment assistance is available only for conventional conforming purchase loans on a primary residence qualified by the applicant's income level. Closing cost assistance provided may not exceed the actual closing cost. Eligibility for the Dream Possible Home Loan is separate from loan approval, which is still required.
2Qualifying counties are Buchanan, Cass, Clay, Jackson, Lafayette, and Platte in Missouri and Johnson and Wyandotte in Kansas.
Content contained in or made available through this blog is not intended to constitute legal or financial / investment/tax advice. North American Savings Bank does not make any guarantee or other promise as to any results that may be obtained from using our content. You should consult an attorney or other professional to determine what may be best for your needs.
