Loan Options for Every Home Buyer
There are loan options for every buyer and it seems one of the most popular inquiries I receive is the need for down payment assistance (DPA). There are a few different options available to buyers, and not only first time home buyers. Right now really is a great time to purchase; there are many different outlets for those needing DPA and loans with a lower down payment. Some of these options are newer but others have been around for a while, such as VA & USDA. Outside of those I also wanted to let you in on another loan option that gets set to the side, a rehab loan. Here is a little insight into these options:
Currently the two DPA grants are available to even non first-time home buyers. There is a 4% grant option, and also up to 5% as well. Both can be used for down payment assistance and/or closing costs and again it is a grant, not a loan, so it does not need to be paid back. They are both used with a government loan (FHA, VA & USDA/Rural); you need to have a minimum FICO score of 640 and there are income limitations (vary with programs, discuss with lender). You are required to contribute $1000 of your own funds towards the purchase. Please note that your earnest money, appraisal and inspection can be counted towards this amount. You are also required to complete a Home Buyer Education course. Here is a link for the information on the classes.
Outside of the two grants available there is CHFA, CHAC & HOAP. These options are not grants; you are required to pay these back. Each program has their own specific requirements and guidelines, make sure to review and discuss with your lender. (Keep in mind that not every lender is approved to work with all (if any) of these down payment assistance programs.)
Outside of the DPA programs, the other loan options available that could be of interest, and again as I previously stated commonly get overlooked is a rehab loan, VA & USDA loan. Here is a brief description of each:
A rehab loan lets you finance all rehab/renovation costs into your mortgage. The most common program for rehab is the FHA 203(k), but now there is a conventional loan option as well. The conventional rehab loan is quickly gaining popularity once our clients are made aware this is available. These loans are very helpful when you find a property that needs some remodeling/updating, or even if you come across a property that is uninhabitable/unwarrantable. These loans allow you to purchase the property only because you are doing the needed repairs/rehab to make the property warrantable. Note: these loans can also be used for refinancing! Again, make sure to discuss details with your lender, each program has specific guidelines and qualifications.
Now, VA & USDA loans are some of the best loan options around, they are loans with 100% financing (if needed)! Yes, they have specific requirements and qualifications, VA you need to be a qualified veteran, wife or widow of a qualified veteran. For USDA the property needs to be in qualifying area. IF you or your property falls into the arena of these qualifying factors, you should discuss and address these options with your lender.
Again, not every lender has the ability to provide these loans and programs so you will need to do your research. Once you have found a lender they should guide you through your options and help you decide on which option would be best for your unique situation.
If you would like to know more about these programs please contact us. We are always happy to help.