Prospective homebuyers who earn 50% of their area median income or less are now eligible for a $2,500 credit they can put toward a down payment or other closing costs, Freddie Mac recently announced down payment assistance.

The credit is available to buyers using Freddie Mac’s Home Possible mortgage product or the HFA Advantage program. Both these programs are designed for very low-income borrowers and have low down payment requirements.

“Today’s announcement is a vital lifeline for would-be homeowners, as studies show that down payment and closing costs are among the largest barriers to homeownership for very low-income homebuyers,” said Sonu Mittal, SVP and head of Single-Family Acquisitions at Freddie Mac.

“Our commitment to supporting these families runs deep, as we have provided assistance to this population through various programs since 2018. We are pleased to now make this assistance more broadly available to borrowers through our Home Possible program.”

The $2,500 can be used for down payment costs but can also go towards escrow and mortgage insurance premiums, as well as most other closing costs buyers face.

As mortgage rates trend down this year, you may find you’re finally ready to buy a home. If you think you’re ready to shop around for a home loan, 

Monthly payments are going down for homeowners

Across the country, monthly mortgage payments are slowly trending down. In December 2023, the average mortgage payment was $2,361, according to a Redfin report. This average is $372 less than October 2023’s all-time high.

Monthly payments have gone down for a number of reasons. Interest rates are dropping and listings are up by 10% year over year, Redfin data shows. This leads to less competition and fewer bidding wars. 

“There have been more tours and more offers on my listings since mortgage rates started declining,” said Shay Stein, Las Vegas Redfin Premier agent. “It’s all about perspective: Two years ago, buyers would have cried about a 6% mortgage rate. Now, they’re happy they’ve dropped down to the mid-6’s.”

While the housing market is far from affordable for many prospective buyers, buying is becoming slightly more manageable for certain buyers.

The share of income necessary to buy a average-priced home fell by about 5% since October of last year, reported the ICE Mortgage Monitor Report.

“In recent months, we’ve seen improvement in rates, affordability, and for sale inventory, with monthly home price growth moderating on a seasonally adjusted basis,” said Andy Walden, ICE vice president of enterprise research strategy.

“While we are still out of sync with historical norms on multiple fronts, each of those metrics have at least been moving in the right direction,” Walden said.

If you’re looking to purchase a home in today’s market, you can explore your mortgage options by visiting Credible to compare rates and lenders and get a mortgage preapproval letter in minutes.

By Christopher Murray Sponsored by Credible – which is majority owned by Fox Corporation. Credible is solely responsible for the services it provides.