Georgia’s First-Time Homebuyer 2022 Assistance Programs

Georgia’s First-Time Homebuyer 2022 Assistance Programs

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Are you tired of renting, living with roommates, or crashing in your parents’ basement but don’t have enough cash squirreled away for a 20% down payment? We get it.

Not all first-time homebuyers have saved enough for a down payment. But there’s good news for first-time homebuyers in Georgia: You don’t necessarily need a hefty down payment if you’re in a low- to moderate-income bracket and have decent credit.

In fact, Georgia offers some downright peachy home buyer assistance loans and down payment grants that provide a financial boost to help make buying your first home more affordable. Ready to learn more? Here’s a closer look at the programs, eligibility requirements, and the details on how to buy your first house in the Peach State.

The Georgia Dream Loan

The Georgia Department of Community Affairs, or DCA, helps lenders provide affordable mortgages to low- and moderate-income first-time homebuyers—or to buyers who purchase a home in a targeted area. (Targeted areas are census tracts designated as experiencing economic distress.)

The DCA offers a Georgia Dream Loan, a 30-year fixed-rate loan secured or guaranteed by FHA, VA, USDA, or conventional loans.

“The borrower also benefits from lower interest rates and rates that do not fluctuate as often as the normal market,” says Armando Morales, an agent with Compass in Atlanta.

Another perk of using the program? You might also qualify for a Georgia down payment assistance program.

Georgia down payment assistance

So you’ve crunched the numbers and found you can swing monthly mortgage payments. But how are you supposed to save up for a down payment at the same time you’re shelling out for rent and bills?

If you’re using the Georgia Dream Loan program, you could qualify for an interest-free down payment mortgage, which could also help with closing costs and other fees.

“A grant from the Georgia Dream is great for the buyer,” says Morales.

Down payment assistance options

The Georgia Dream down payment assistance program is broken down into three categories and amounts:

• The STANDARD, which amounts to $7,500 for all eligible homebuyers
• The PEN, which amounts to $10,000 in down payment assistance to protectors, educators, and nurses (i.e., PENs), as well as active military homebuyers
• The CHOICE, which is $10,000 available to homebuyers housing a family member living with a disability.

And though these are called loans, you don’t have to make any monthly payments on them unless you sell, refinance, or no longer live in the home as your primary residence. If one of those situations occurs, the funds you pay back work in a “pay it forward” way because the program uses the money it recoups to help the next generation of homebuyers.

Georgia assistance eligibility requirements

In addition to being a first-time homebuyer—meaning you haven’t owned a home in at least the past three years—these are some of the qualifications you must meet to receive homebuyer assistance in Georgia:

• Your income must not exceed set limits, which vary by county and size of household.
• You’ll need a credit score of 640 in most cases.
• You can’t have a debt-to-income ratio above 50%.
• Your liquid assets must not exceed more than $20,000 or 20% of the house’s sales price—whichever is greater.
• Your home’s sales price must not exceed the limit stated by the county.
• You must complete a homeowner education workshop, individual housing counseling session, or online homebuyer education course to land a mortgage or receive down payment assistance.
• You must choose a participating lender from the program’s list.
• You’ll need to contribute a minimum of $1,000 of your money (or documented gift funds) to the purchase transaction.

A breakdown of liquid assets and debt-to-income requirements

Sometimes, the terms mortgage lenders use are confusing. Take “liquid assets” and “DTI,” for example. What exactly are they, and how do they affect your loan approval?

“‘Liquid assets’ are considered funds available in your checking, savings, stocks, or other easily salable assets,” says mortgage lender Alvaro Moreira, owner of the Georgia mortgage company Moreira Team. Assets might also include substantial gifts, IRA/retirement funds, or even cryptocurrency.

And why is a “debt-to-income” ratio so important? Lenders use the DTI to gauge your ability to manage monthly payments and repay debts. (They want to ensure you won’t be overextended when you start making loan payments.)

If your lender determines your DTI is too high, there are some ways to reduce it.

Moreira says a good start is to look at your car loan. If possible, refinance the loan to a lower rate and payment. Next, review your credit cards and pay off the ones with the highest payment-to-balance ratio.

And if you have high student loans, the good news is that standards for assessing student debt are slightly relaxed these days. But it’s still a good idea to try to pay down your loans with high-interest rates.

First-time homebuyer assistance in your backyard

Georgia offers worthy programs across the state that might suit your financial needs better than the Georgia Dream programs. So make sure to check what local assistance is available in the areas where you’re hoping to buy.

For instance, if you are house shopping in Atlanta, you could snag up to $20,000 toward the down payment and/or closing costs, courtesy of the homebuyer assistance program Invest Atlanta. Some loans will also be fully forgiven—meaning you don’t pay a dime after living in the home for five to 10 years. But, of course, it all depends on the amount you borrow.

Or maybe you have your heart set on settling down in Savannah. The DreamMaker Home Purchase Assistance program provides up to $7,500 in down payment, closing cost, and/or gap financing assistance to qualified first-time homebuyers looking to live in the area.

How to get started

Whether you check off all the eligibility boxes or have a question about them, the Georgia Dream program suggests you chat with a participating lender to pre-qualify.

It typically takes around 60 days to process a Georgia Dream loan from application to closing. And while that application is processing, you can take one of the mandatory homebuyer education courses.

Then, once you are pre-approved, you can start working with a buyer’s agent to find your first home in the Peach State.

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