Fifth Third Bank Offers Guidance on How to Make Homeownership a Reality in Challenging Environments

Opportunities exist despite higher interest rates, low inventory. Many states offer special programs, incentives, down payment assistance

CINCINNATI—Many potential homebuyers are concerned about making one of the biggest purchases in their lives, whether because of high interest rates or the competitiveness due to a low inventory of homes. Fifth Third Bank, National Association, has some tips and guidance to ease fears and find homebuying opportunities.

"A lot of customers are getting discouraged by high rates and lack of inventory," said Jay Plum, head of mortgage at Fifth Third Bank. "But there are many state programs and down payment programs available to help. The key is to ask a lot of questions."

Questions to ask when you’re buying a home

  • What is affordable for me? Look at payment instead of interest rates.
  • What type of mortgage is best for me? Should I base that on how long I plan to live in the home?
  • What kind of down payment assistance programs are available in my area? What do I need to do to see if I qualify?
  • What agencies are in my community that can help me through the homeownership process in conjunction with a mortgage loan officer?
  • What are the minimum qualifications that must be met to purchase a home (credit, job history, etc.) and what documentation is needed to determine what I qualify for?
  • What is mortgage insurance, and will I have to pay for it?
  • What costs will I pay at closing?
  • Having a good realtor on your team is critical. When searching for a realtor, be sure and ask: What is your area of expertise? What geographical area do you cover? How do you advocate for your clients? What is your commission rate?

The U.S. Department of Housing and Development also offers a list of common questions. And Freddie Mac provides a variety of free financial education programs, including its CreditSmart Homebuyer U, which helps potential homeowners understand the homebuying process step by step.

Programs available for first-time homebuyers

Most states offer first-time homebuyer programs. There is down payment assistance1 and other tools to get you into a home. For example, Fifth Third customers may be eligible for down payment assistance if they qualify based upon income level and by purchasing a property to be used as their primary residence in a low- or moderate-income census tract. Down payment assistance up to $3,600 can be made or is potentially available.

Fifth Third's Community Mortgage2 aims to make homeownership more accessible to more people. Low-income families often face multiple barriers to buying a home, with saving for a down payment and paying for closing costs at the top of the list. The Community Mortgage can make a big difference by decreasing the amount of cash that homebuyers need for a down payment—only 3 percent of the purchase price—while also providing eligible buyers with a credit they can put toward closing costs.

Depending on where you live, there may be state, county or city down payment programs available to you. The programs and eligibility range, but can be as high as $50,000 in down payment assistance, which can make a significant impact when buying a home.

Your mortgage loan officer can assist in finding programs specific to your area, and The Mortgage Reports offers a 2023 guide to down payment assistance in the U.S. Here are some regional and state-based programs to consider:

  • The East Tampa CRA Down Payment Assistance Program offers down payment assistance in forgivable loans up to $50,000 to eligible homebuyers who would like to purchase a home within the East Tampa footprint.
  • The Homestretch Down Payment Assistance Program in Gwinnett County, Georgia, can provide down payment assistance up to $7,500 to income-eligible, first-time homebuyers who have the capacity to purchase a home but lack the money needed for a down payment.
  • The National Fair Housing Alliance offers the Inclusive Communities Fund which reinvests in communities that have been harmed by discriminatory practices through grants that go directly to families and into neighborhoods.
  • The city of East Chicago in Indiana provides the Homeownership Incentive Program to attract homebuyers earning moderate incomes to purchase a new home. The program provides up to $25,000 in down payment assistance.
  • Louisville offers the Metro Down Payment Assistance Program which provides low- to moderate-income homebuyers with down payment and closing cost assistance for purchasing a home in the Louisville Metro area.
  • The National Faith Homebuyers has down payment assistance programs for Detroit and surrounding communities.
  • The Downtown Housing Improvement Corporation of Wake County in North Carolina provides The Affordable Homeownership Program offers forgivable, no monthly payment loans up to $50,000 to low- to moderate-income households.
  • In Cleveland, the Mayor's Neighborhood Transformation Initiative offers up to $20,000 in down payment assistance to eligible homes in the Glenville-Circle North neighborhood.
  • Community Works Carolina’s Greenville County Homebuyer Assistance Program can provide up to $10,000 in down payment assistance to qualified applicants.
  • The Housing Fund in Tennessee has its Down Payment Assistance Program that offers up to a $35,000 loan for down payment, prepaids, and closing costs to individuals and families.

Date the rate, marry the mortgage: Fifth Third’s Rate Drop Protector

Fifth Third’s Rate Drop Protector program allows prospective homebuyers to purchase a home and lock in rates today, knowing that if rates decrease in the future, Fifth Third will waive all applicable lender closing costs on the subsequent refinance transaction.

How it works:

  • Customers who apply for and purchase a home with an eligible Fifth Third Bank product3 between April 1 and Sept. 30, 2023, are eligible for Rate Drop Protector.
  • If those eligible customers opt to refinance their home between 6 and 24 months from the time of the original purchase closing date, Fifth Third will waive their processing, underwriting, application, origination or commitment fees, which is a savings of up to $1,295.

To learn more, visit Home Mortgage Loans or talk to a mortgage loan officer at your nearest Fifth Third branch. This Rate Drop Protector offer is not a commitment to lend or lock a rate.

"The Rate Drop Protector is another example of how we keep customers at the center of everything we do. We’re watching out for our customers now and in the future," Plum said. "We want our customers to be confident that buying a home today is still a smart financial decision and we’ll have their back should rates decrease."

Buying versus renting

Should you rent or should you buy? There are a variety of factors to consider.

Surprising to some, buying a home is typically cheaper than renting, depending on the location.

When you rent versus buy, you lose the opportunity to build wealth through homeownership. Rent has been continually increasing, so the time may be right to consider making a home purchase.

As a rule of thumb, if you’re planning on staying for the next 5-7 years, then buying a home may be a better long-term solution. On the other hand, if you’re thinking about moving in the near future, renting may be the better choice.

There are a variety of benefits of homeownership, including having the ability to paint, plant and make changes and renovations. Typically, that is not allowed when you rent. Also, when you own a home, it helps grow equity and you may be able to deduct mortgage interest on your taxes4.

Ultimately, you should weigh the pros and cons of buying or renting, and Fifth Third also offers a rent versus buy calculator to help.

About Fifth Third

Fifth Third is a bank that’s as long on innovation as it is on history. Since 1858, we’ve been helping individuals, families, businesses and communities grow through smart financial services that improve lives. Our list of firsts is extensive, and it’s one that continues to expand as we explore the intersection of tech-driven innovation, dedicated people and focused community impact. Fifth Third is one of the few U.S.-based banks to have been named among Ethisphere’s World’s Most Ethical Companies® for several years. With a commitment to taking care of our customers, employees, communities and shareholders, our goal is not only to be the nation’s highest performing regional bank, but to be the bank people most value and trust.

Fifth Third Bank, National Association is a federally chartered institution. Fifth Third Bancorp is the indirect parent company of Fifth Third Bank, and its common stock is traded on the NASDAQ® Global Select Market under the symbol "FITB." Investor information and press releases can be viewed at Deposit and credit products offered by Fifth Third Bank, National Association. Member FDIC.