Do you know all the different programs available with little or no money down?
Conventional 97% – (That’s 3% down) Fannie Mae has reinstated their 3% down loan program. One of the borrowers must be a first time homebuyer, which means that they cannot have had ownership interest in a home in the past three years. Also of the down payment can be a gift from a family member!
Home Possible/Home Ready – Like the Conventional 97% program, these Fannie Mae/Freddie Mac products are for lower income buyers and offer reduced mortgage insurance costs. Borrowers must complete a homebuyer education class. Set income limits are established by each county, which must be adhered to.
FHA Loans – The Federal Housing Administration (FHA) allows buyers to get into a home with a 3.5% down payment, which can be in the form of a gift from a family member. FHA makes allowances for lower credit scores and higher debt-to-income ratios.
203K Loans – There are FHA products that allow for some improvement or construction financing to be rolled into the purchase mortgage. The standard 203k provides up to a minimum of $5,000 to make some minor improvements to the property, a limited 203k can accommodate a complete renovation up to $35,000 in repairs. We have 203K specialists on staff that are experts in these programs.
VA Loans – These are first class zero down payment loan programs. Wintrust waives our processing and underwriting fees for our veterans. The seller can contribute up to 4% as a credit towards closing costs and Wintrust Mortgage can offer a lender credit to minimize closing costs as well. Always be sure to ask your prospects if they have served in the military.
USDA Loans – The US Department of Agriculture (USDA) has a home loan division that allows 100% financing. The property must be in a rural zone and the borrower’s income must be within the USDA income limits. Give us a call if you want to learn more about USDA qualified communities in your area, there are more than you think. Many communities meet the USDA requirements even though we may not think of them as being particularly “rural.”
State Bond Programs – Most states offer a housing program of some type that allows for low to no down payment and other benefits for the state’s low to moderate income residents. For example, Massachusetts offers the Mass Housing program, which has income limitations and is available to first time buyers only (defined as not having ownership in a piece of real estate in the past three years). The program requires that the buyer attend a home buying education class.
Each of these programs offers different benefits and advantages depending upon the profile of the homebuyer. Let your mortgage professional at Wintrust Mortgage navigate this maze with your buyers. We will provide complete education on all programs and provide written comparisons on everything. Homebuyers will be better equipped to make an educated decision on how to structure their new home purchase in a way that meets their needs and dreams!