It’s spring, and some renters’ thoughts may turn to home buying. Then reality hits: Between paying off student loans, paying rent, and keeping up with other bills, they haven’t saved for a down payment.

Renters cite down payments as one of the biggest roadblocks to homeownership. So, if you’re a low- to moderate-income home shopper in California, Florida, Rhode Island, Tennessee, or Kentucky, you’ll want to pay close attention. These states (and a few others) have Hardest Hit Fund (HHF) money available from the U.S. Department of the Treasury, which helps eligible buyers with down payment assistance (DPA).

Each state DPA program has income, credit score, occupancy, property value, and location requirements. But they share a common goal: revitalizing hard-hit communities.

“Our goal is to stabilize the neighborhoods and housing markets in Tennessee that have not recovered as fast as other areas across the state,” says Ralph M. Perrey, executive director of the Tennessee Housing Development Agency, which offers $15,000 in down payment assistance to draw home buyers to 55 ZIP codes across the state.

Innovative offerings

Housing agencies in 18 states and the District of Columbia have been administering HHF money since 2010. Participating states were chosen either because they struggled with unemployment rates at or above the national average, or they experienced home price declines greater than 20 percent since the housing market downturn.

In the beginning, programs focused on homeowners in some type of mortgage distress. “Now, to help these communities, we’ve developed programs for other issues we face,” says Cecka Rose Green, communications director at Florida Housing Finance Corporation.

Florida, California, Oregon, and Michigan have made HHF available to seniors who can’t pay property charges on their home equity conversion (reverse) mortgages. Illinois is now using HHF to help underwater homeowners refinance to more affordable loans. And several states have launched HHF DPA programs.

Florida’s $188.4-million HHF DPA program has assisted 7,481 first-time borrowers across 11 targeted counties. Borrowers can request up to $15,000 for down payment, closing cost, and prepaid assistance toward a home purchase.

“With the housing market improving, helping people buy homes is strengthening demand in hard-hit areas, stabilizing home prices, and preventing future foreclosures,” says Green.

“These agencies are being creative and resourceful in working with the Treasury to continue to serve their markets,” adds Mark Spates, a Fannie Mae director. Fannie Mae is the leading purchaser of loans underwritten by state housing agencies.

When the money runs out

States have until the end of 2020 to spend HHF money – but how they allocate funds varies from program to program.

The Arizona Department of Housing has a $76-million Pathway to Purchase DPA program, which has helped more than 2,600 buyers in 17 targeted cities.

But on March 29, 2017 – approximately 12 months after launch – Pathway to Purchase ran out of money, and the agency will not refund it. However, buyers can still apply for DPA from the state’s self-funded program, notes Dirk Swift, homeownership programs administrator for the Arizona Department of Housing.

Don’t wait!

California, Florida, Rhode Island, Tennessee, Kentucky, and a few other states still have HHF DPA money for renters hoping to buy – for now.

“We’re not in a situation where we’re about to run out of DPA funds,” advises Green. “But they’re going pretty fast.”

If you plan to purchase in an HHF state or want to learn more, contact your state housing finance agency, or visit the Hardest Hit Fund website to learn about local opportunities.

Looking for more information about mortgages? Check out our Mortgage Learning Center.

Top photo from Zillow listing

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Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

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