Many counties and cities in Northern California, and other states nationwide offer First Time Home Buyer Assistance Programs. Most of the programs are focused on down payment assistance that are income driven and benefit to the low to moderate income First Time Home Buyers.

Depending on each program guideline, the first time home buyer assistance programs will provide 3-20% down payment assistance to qualified First Time Home Buyers. In some situations, it could be more than 20%. These programs work in different ways. While some programs help paying for the down payment, others help paying for the closing cost, and some can be used for both.

First Time Home Buyer Assistance or Grant

Some First Time Home Buyers are confused about assistance and grant. These programs are assistance not grants, in the other words, they are loans. Therefore, the assisted buyers are obligated to pay back the assistance at some points during the ownership of their home.

The idea behind the first time home buyer assistance programs is to help those First Time Home Buyers who do not have enough down payment funds at the time of purchase, and otherwise would not be able to acquire the homes. For this reason, according to each program guideline, some of the programs provide deferred payment, no payment no interest for the first 5-year or no payment for the duration of the loan prior to final payoff, low interest or any combination of the said options.

Neighborhood Stabilization Program

As we all know that the real estate market has been hard hit by sub-prime crisis. Many neighborhoods are in shaky situation due to foreclosure and short sale. U.S. Department of Housing and Urban Development (HUD) established Neighborhood Stabilization Program (NSP) for the purpose of stabilizing communities that have suffered from foreclosures and abandonment.

Many counties and cities received NSP grants for the said purpose. The county/city authorities achieve this purpose through purchasing, redeveloping and reselling foreclosed and abandoned residential properties. Home buyers who purchase these foreclosed houses will receive down payment assistance according to the program guideline.

Home Buyer Education Workshop

Most of the first time home buyer assistance programs require buyers to attend a Home Buyer Education Workshop and obtain a home buyer’s education counseling certification of completion issued through Fannie Mae or Freddie Mac identified counseling administration agencies, mortgage insurance companies, or HUD-approved home buyer counselors.

Most lenders can help you processing the down payment assistance and loans. Contact a lender in your local area for further information.

For your convenient, here is a list of handful Down Payment Assistance Programs and Home Loans for your reference.