Down Payment Assistance with No Income Limit: Does It Exist?
According to Urban Institute, about 72% of the nearly 1700 down payment assistance (DPA) programs in the U.S. have income limits.
While that’s a majority, more than 27% of programs have no income limits.
There’s a reasonable chance that you’re eligible for a DPA program in your area despite a higher income.
This is welcome news for those who make too much for most DPA. But where can you find an potential program?
Why Many Homebuyers Need DPA Despite Higher Incomes
Dollars don’t go as far for homebuyers in high-cost-of-living (HCOL) areas.
For example, $200,000 per year might be a king’s ransom in Alabama, but in Seattle, Boston, or L.A., it barely gets you into a starter home.
Armed with 5% down and no debt, someone making $200,000 per year would qualify for a home of around $800,000. This assumes a rate of 7% and a 36% housing debt-to-income ratio.
That seems like a healthy homebuying budget until you see Zillow data on single-family home prices in cities like these.
Seattle: $928,000
Boston: $762,000
L.A.: $1,022,000
Renting is likewise expensive, curbing would-be homebuyers’ ability to save up a large down payment.
Is there help for homebuyers in HCOL areas?
Lender DPA Programs
A little-known but powerful source of down payment assistance funds are lender-created DPA programs.
These are available nearly nationwide and often don't come with limits on income.
The DPA programs aren’t free money: lenders charge higher rates and fees, then credit back to the buyer extra profit as down payment funds via a third party.
Lenders offer them because you must use them for the loan and the DPA program. You can't take the DPA without using them as the lender. In this way, they increase their much-needed business.
These DPAs can be useful for someone with a high income but no down payment.
One example is from a wholesale lender, AFR, and its DPA Advantage program. This lender doesn't lend directly; it offers its programs through mortgage brokers.
To be eligible you only need to qualify for an FHA loan, according to AFR’s website. Since FHA has no income limits, this program is available to any FHA-qualified buyer.
Keep in mind that you must accept an FHA loan. The program doesn’t work with conventional lending. Still, this could be a great “hack” for a high earner wanting DPA.
There are other examples in the market. Call a mortgage broker or complete the form below and ask about DPA programs without income limits. The lender will likely have two or three programs available.
Don’t Assume Your Income Disqualifies You For DPA
Even if a DPA comes with income limits, you might not make too much to qualify.
Use your area’s HCOL status to your advantage.
Many DPAs are based on your area’s median income, which is likely elevated in your area.
For example, Seattle’s median income is currently $137,300 compared to $94,100 in Houston.
A DPA with a cap of 120% of median income would mean you could make $164,760 in Seattle.
According to Urban Institute, 46.5% of DPA programs are available to households earning 120% or more of their area’s median income. Over 27% of programs have no income cap at all.
The key is knowing where to look.
Where To Find High-Income-Limit DPA Programs
Down payment assistance programs are typically local, although there are a few offered nearly nationwide.
There are many places to look for DPA where you may discover programs with high income limits or none at all.
Your state housing finance agency
City and county government websites
Non-profits
Your employer
Nationwide lenders
Local banks and credit unions
Native American Tribal agencies
State finance agencies in high-cost states could be a good place to start. States know when their housing is expensive. As such, they increase income limits for many programs.
For example, Washington State offers programs for incomes up to $180,000. California’s housing agency, CalHFA, offers homebuyer assistance programs for incomes up to $300,000 in Marin, Santa Clara, and San Mateo Counties and very high limits elsewhere.
Paste the following into your browser, completing your specific information, to search for local programs: “down payment assistance [(your state, city, and county) (your profession) (non-profits and credit unions in your area)].” Or click here to do a Google search for your local programs.
Homebuyer Attributes that Help Overcome Income Limits
Often, DPA providers look at other attributes besides income to determine eligibility.
Some qualifications that may help you find programs are:
First-time homebuyer: Perhaps the most important eligibility criteria of all is your first-time buyer status. If you haven’t owned a home in three years, you may be eligible despite higher income.
Your profession: Teachers, police officers, firefighters, and other public service professionals may have access to special programs like these.
Military service: Many states, cities, and counties offer DPA to active duty service members and veterans.
DPA: No Longer Only For Lower Incomes
Urban Institute says, “Home price growth significantly outpaces income gains. Many DPA programs have adapted to reflect this trend."
Unfortunately, a high income no longer means you don't need down payment assistance.
You might be surprised at the assistance you’re eligible for.
Tim Lucas is the editor and Lead Analyst for MortgageResearch.com. Tim spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. He has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, and more.
