These States Will Cover Your First Home's Down Payment in 2020

With home prices continuing to go up in the United States, many people have given up on the prospect of owning a house. However, the tax deductions associated with mortgage interest combined with these great state-based Down Payment Assistance (DPA) programs can make home ownership a reality for nearly anyone. This article includes only state-level programs that contribute a substantial amount; some localities may have their own programs.

The list also excludes states that require those with a certain amount of savings to exhaust their funds before they're eligible. Though income limits apply for every program, these programs offer an unconditional "deferred loan," meaning that you won't need to make any payments unless you move out or you live in the house for a certain length of time.

• Alabama
Alabama's program called "Step Up" will cover 3% of your first home as long as you earn less than $97,300 per year. Depending on locality, their "Affordable Income Subsidy Grant" can give new homeowners anywhere from $1,500 to $2,500 to assist with closing costs.

• California
California has hundreds of local programs, but the main one that applies to everyone in the state is the "MyHome Assistance" program. Income limits apply by county, and if you qualify, you'll receive a deferred loan of 3.5%, the minimum down payment for an FHA. Many public school employees qualify for a 4% loan. You only have to pay it back if you sell the house or move out.

• Delaware
Delaware offers between 2% and 5% of the home's value as a deferred loan that must be paid back when the home is vacated. The exact amount depends on income, purchase price, and in which county the house is located. This loan can be applied to both the down payment and closing costs.

• Idaho
Idaho is one of the few states that offers a forgivable loan. As long as you contribute 0.5% of the purchase price, Idaho will cover 3.5% of it. Though a state lien is placed on the house for seven years, the house is yours after that. You're free to sell it with no obligation to pay the 3.5% contribution back.

• Illinois
Illinois offers a generous 4% contribution in the form of a forgivable loan. However, their contribution cannot be more than $6,000. After ten years, this is fully forgiven. However, the program has fairly stringent requirements, including a credit score of at least 640.

• Indiana
Like Illinois, Indiana requires a minimum credit score of 640. The state will pay up to 3% of the purchase price in the form of a forgivable loan. The loan is forgiven after a mere two years, the lowest on this list.

• Maine
Maine's program is fairly unique. The state will contribute up to $3,500 cash towards your new home purchase. You are required to contribute 1% of the purchase price and attend new homeowner education courses. The cost of these courses will be deducted from the 1% you owe, making your required contribution trivial.

• Nevada
Nevada offers the highest percentage of the purchase price, up to 5% based on your eligibility. This is in the form of a loan forgivable after only three years. It can also be used for both down payment and closing costs.

• Oklahoma
Oklahoma will pay 3.5% of the purchase price of a home as long as it isn't more than $283,349. To take advantage of this, you must use a 30-year, fixed mortgage.

• South Carolina
South Carolina uniquely offers a flat $6,000 loan forgivable after ten years for new home buyers. The only requirement is that the household's income is less than 80% of the zip code's median income.

• Tennessee
Tennessee offers a generous, uniquely structured DPA program. First, new home owners qualify for the very low-interest "Great Choice Home Loan" provided their income isn't considered high for the locality. After taking a mandatory home buying education course, new buyers qualify for a deferred loan valued at 5% of the home's value, as long as it isn't above the county's limit, commonly $250,000. It may be applied to both closing costs and the down payment.

Making the Best Choice

Every state has some form of assistance for first-time buyers. Many only offer local programs or have complex bracketing structures. If you put in the research, chances are it will literally pay dividends.

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