Low Down Payments and Grant Programs
There are many programs out there for the first-time home buyer. Each state may have their own programs and grants. Within each state, some counties may have different types of programs however the availability of funds may be limited either annually or by quarter. Home buyer’s general have to take credit counselling courses. These courses may different per county and may only be specific to that county.
Programs vary, as some grants are actually gifts while most are second mortgage loans with 20 or 30-year payback time frames. These second mortgages are generally zero or up to 2% interest note rates. Grants that are second mortgages do have underwriting requirements so expect your loan process to take on average an additional 15 days for processing and approval.
All these programs whether gifts or loans have strict requirements and are subject to underwriting before receiving a full approval. These restrictions include higher credit score requirements over standard first-time home buyer programs such as FHA. They most always have lower debt to income limits and also annual income limits based on house hold occupants.
While most people do get excited about these grant and down payment programs I thought it would be best to grab this quote for Freddie Mac that came out earlier this past summer. It describes it best for borrowers to better understand that the stricter underwriting is part of the process and that the underwriter is not just giving them a hard time.
“In 2014, following the leadership and instruction of the FHFA, Freddie Mac introduced Home Possible Advantage, an affordable conforming, conventional mortgage offering with a 3% minimum down payment requirement. Home Possible Advantage includes higher underwriting standards that counterbalance the risk associated with lower down payments. These standards were established to responsibly serve a targeted segment of creditworthy Borrowers with lower down payment Mortgages. The change we are announcing today reinforces these standards”. (quote from a Freddie Mac bulletin released July 6th 2017)
The basic first-time home buyer programs include but are not limited to FHA, VA, USDA, Home Possible and Home Ready programs. While each state may have its own grant programs many counties within your state may have special down payment assistance programs such as “SHIP” or “HOPE” programs each having its own special requirements.
If you would like to find out more about these programs and which ones you may qualify for in your area please feel free to call or email us. If we can’t help you we will be happy to help point you in the right direction. So don’t hesitate to ask questions, get all your facts, find the best loan program, get prepared and we will see you at a happy closing table.