Consider for a moment the fact that a $400,000 house is currently growing $2433 in price each month. Can you consistently put away more than $2433 each month in savings for your future down-payment? The reality is you simply can not afford to save for your down payment, as your dream home will just slip further and further out of your reach.
This is why our younger generation isn’t buying homes at the rate that previous generations did. Is that you?
With student loan debt weighing you down, there is little money left at the end of the month to set aside for the down payment on a home, and lenders will require you to have some skin in the game before they’ll lend you money for that home.
Thankfully, there is help – both state and municipal agencies offer down payment and closing cost assistance to home-buyers across the country.
While it will take some support from your lender, you can get around saving that huge chunk of cash known as the down payment by utilizing down payment assistance.
Down payment assistance
Down payment assistance comes in the forms of grants (that don’t have to be repaid) and loans — some at no interest or very low interest and some don’t have to be repaid until you sell the home.
The California Housing Finance Agency (HFA) offers programs for down payment assistance through approved lenders. Each loan program that CalHFA offers to home-buyers can have different criteria for income limits, minimum credit scores, citizenship etc. To learn about specific requirements and benefits for each program, review the program descriptions here.
I can get you in touch with a CalHFA-approved preferred lender so you can begin your pre-qualification.
Then, there are special programs for teachers and first responders. See HUD’s Good Neighbor Next Door program for information on these programs.
Find state and local government programs on HUD’s website, here.
What’s even better than down payment assistance? No-down-payment loans!
1. If you are a current member of the military, a veteran or a surviving spouse, consider the amazing benefits of the VA Loan.
The United States Department of Veterans Affairs doesn’t actually grant loans; they guarantee the repayment of a portion of the loan should the borrower default.
The VA-backed mortgage requires no down payment and there is no requirement to purchase private mortgage insurance, which will make your monthly payment lower than with a conventional loan.
There is, however, a funding fee, but it can be wrapped into the loan amount, so you won’t have to come out-of-pocket for it. Visit my blog Top 5 Benefits of the VA Loan to learn more!
The VA Loan is granted by a private lender but not all lenders participate in the program. Please reach out to me at 714-328-0233 to get connected with a local preferred lender today.
2. The United States Department of Agriculture (USDA) offers the Rural Development home loan program which also requires no down payment.
They offer two different loan programs. The first is very much like the VA Loan in that it offers the lender a government-backed guarantee.
The second program is a direct loan from the USDA and it’s for low-income borrowers.
These loans are for homes in rural areas and you can learn if a home you are interested in qualifies by using the USDA website’s eligibility tool.
If down payment assistance is not an option, consider the popular FHA Loan! Yes, FHA is very popular among first-time home-buyers for its low down-payment requirement. One important note about the FHA loan is the Mortgage Insurance Premium stays for the life of the loan.
If you need a low-down payment loan, this may likely be your program of choice. You’ll pay either 3.5 or 10 percent of the loan amount for a down payment, depending on your credit score and lender requirements.
Fannie Mae and Freddy Mac
The HomeReady® loan from Fannie Mae actually offers a lower down payment requirement than the FHA program – 3 percent. You will also have the option of canceling the PMI when your equity in the home reaches 20 percent.
This loan is best for low-to-moderate income borrowers with credit scores of 680 or more. You do not need to be a first-time home-buyer to qualify.
Home Possible®, Freddie Mac’s low-down payment program, offers down payment options as low as 3 percent. Learn more about this program online at freddiemac.com.
Ready to find your dream home? Give me a call today at 714-328-0233 and receive the best care from my preferred lenders, who will guide you through down payment assistance and help you discover the best low-down or no-down loan program for your needs. Let’s start your pre-qualification!