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Study Finds Receipt of Down Payment Assistance Not Associated with Default Risk

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A newly released paper by researchers at Harvard and UNC-Chapel Hill examines the relationship between down payment assistance and default risk. Using a national affordable lending data set from the Community Advantage Program (CAP), researchers looked at more than 3,000 loans originated between 1999 and 2003. Taking into consideration borrower and loan characteristics, they found that receipt of down payment assistance was not associated with default risk. Moreover, black home buyers were less likely than whites to have received assistance from family and friends but more likely to receive a government or community grant, indicating government programs can be especially helpful for minority borrowers.

Down payment assistance can be critical to buying a home, especially for low-to-medium income borrowers and first-time buyers. The North Carolina Housing Finance Agency offers several down payment assistance options for first-time buyers, military veterans and other qualified individuals. Learn more.