What's the Present Value of a Deferred Loan?

As a prospective homebuyer, I'm being presented with two different programs to help me buy a home.  The first is a straight 3% gift of the purchase price amount.  The second is a $25k loan, at 0%, with the first payment due in 30 years; starting in year 30, the payments would be $200/mo until paid off, about 10.4 years later.

Let's say I'm trying to buy a house worth $250,000.  Which is the better deal?  The first option, 3% of 250k, is $7,500.  Is there a way to determine if the present value of the $25k, 0% deferred loan is higher than $7,500?



To answer a responder's question: These are state-run programs offered by the Colorado Housing and Finance Authority (CHFA).  So it's about as legit as it gets.  Thanks!

1 Answer

  • Anonymous
    1 month ago

    The 25k loan is going to be a way better deal if you are smart with your money and can just pay it off at year 30.

    But what happens if you sell the house before year 30?

     Who is presenting you with these "programs"?    Unless this is some sort of state/local program that you qualify for, I'd be suspicious.   There are no free gifts from commercial lenders.   You're likely paying for it somewhere, somehow.

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