Build Your Loan
First-Time Home Buyers
Previously buyers needed 20% down in order to purchase a home. Most buyers, especially first time buyers, have a difficult time saving that much for a home purchase. Especially with all the unexpected things life throws us! Luckily, you don't need 20% down anymore to get you into your own home!
Borrowers can often get into a new home with as little as 3% or even 0% down using one of these low–down–payment mortgage programs:
Conventional 97 – From Freddie Mac or Fannie Mae. 3% down payment options available.
FHA loan – Backed by the Federal Housing Administration. 3.5% down and flexible credit terms.
VA loan – Only for veterans (which of course includes the National Guard and Coast Guard). Zero down payment is required. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible.
USDA loan – For those on low–to–moderate incomes buying in designated rural areas. Zero down payment required. Low mortgage insurance rates
Down Payment Programs – Almost always for primary residence purchase only and many programs limit to first time buyers.
How The Process Works
First time buyers are often confused as to where to start. Many times, they see a house they like and contact the listing Realtor. Regardless, they are always directed to the appropriate place which is with me. Your agent and seller will need to know if you're qualified for financing, how much house you can purhcase, any red flags, and if you're pre-approved. So call me and I'll walk you through the process and help educate you on what to expect and help take away some anxiety you may have.
Here is the process in a nutshell:
1.) Get Pre-approved - Contact me or click one of the options on the page to start your application and/or get any questions answered
2.) Go house hunting! - I will send you and your agent a pre-approval letter outlining your terms and what you qualify for. Your agent will show you properties and help you complete the property paperwork to submit an offer
3.) Start the financing - Once you have an accepted offer, the contract and all other documents will be sent to me for loan submission
4.) Loan Initiation - Once all documents are received and submitted, processing will order title work and the appraisal
5.) Conditional Approval - While waiting on title and appraisal, the underwriter will issue approval conditions
6.) Clear Conditions - I will contact you for additional documentation requested by the underwriter. These could be items like letters of explantion, updated paystubs, etc.
7.) Final Submission - Once all conditions, title, and appraisal are received, they are all submitted back to the underwriter to clear
8.) Clear to Close! - These are the magic words you want to hear. This means all conditions are cleared and we can schedule closing
9.) Sign - All parties meet to sign loan paperwork and deed
10.) Move in! - Congratulations! You are now a home owner!
11.) MOST IMPORTANT! - Tell all your friends and family how much I helped you get into your beautiful home and was always there to answer your questions! Introduce me! :)
Are all programs based on income? If so, what are the income limits?"While MOST program do have income restrictions on use, there are some that do not. It is very typical, however, that there are more favorable terms for lower income borrowers. Some examples of favorable terms for lower income borrowers include, but are not limited to, lower rates, forgivable assistance. higher amounts of assistance, etc. For those programs that are limited on household income, the programs typically limit buyers to 80% of area median income as defined buy the Department of Housing and Urban Development (HUD). The link to limits in your area can be found here: https://www.huduser.gov/portal/datasets/il.html
I am pre-approved with another lender but they don't provide down payment assistance. Can I get the assistance elsewhere and still use my lender?No. The assistance and loan go hand in hand. The same lender will have to handle both parts of the loan. Depending on how the assistance is structured, often times there are lenders that are unable to participate due to how their organization is structured. Many programs are limited to direct and/or correspondant lenders and aren't eligible for use by mortgage brokers.
My lender said they can't utilize a specific program. Are they lying to me?Likely they are telling you the truth. Many of these programs are limited to how the lending organization is structured. For example, many of these programs aren't eligible for use by mortgage brokers because they don't lend their own money. There are also lenders who simply choose not to participate in down payment assistance programs due to the extra work, risk, or whatever their reason may be.
I can qualify for a loan, does that mean I automatically qualify for down payment assistance?"No it does not. These programs have additional requirements that must be met. Not only do you have to qualify for the loan, you will also have to qualify for the assistance. You may qualify for a loan but not the assistance and vice versa.
Do I have to pay back the assistance?Usually no, but it depends. This can vary with each program. Often (especially with the lower income borrowers) assistance is zero interest and zero payments and is forgiven after a certain period of time (often 3-5 years). Often higher income buyers utilizing assitance will have a low repayment option. Bottome line, however, is it just depends on which program you use. We will discuss the best options for your individual situation.
Are there restrictions that come with utilizing assitance?Yes. Many of them are structured as a forgivable 2nd mortgage. This means that if you were to sell, payoff, or refinance your loan prior to the terms specified with the assistance, you may owe a portion of the assistance back. There are usually options that allow refinancing with permission from the provider of the assistance. While rare, there can be programs without any restrictions post closing. There is such a program in Ohio which we are approved to offer.
Do I have to be a first time home buyer to qualify for assistance?Usually no, but it just depends on the organization that provides the assistance. Similar to student grants or scholarships, the provider typically can write in whatever rules and restrictions they desire for the assistance.