By Wanda Norge
Still need down payment funds to quit paying rent or move to a bigger home? There are several options for those that have limited amount of funds to meet down payment requirements.
These are the BEST loans and one of my favorite loans to do. Qualifying veterans can get into a home with NO down payment.
Down Payment Assistance
There are several options to take home buying classes that will give clients access to down payment funds. The Colorado Housing and Finance Authority (CHFA) and Colorado Housing Assistance Corporation (CHAC) are two great options. You do not necessarily have to be a first time homebuyer. The drawback is that the interest rates are higher on these loans, but if you have no other means of getting down payment funds, it is a good stepping stone to home ownership.
If a family member than can provide tax free gift funds for the down payment that can help avoid the higher interest rates of getting down payment assistance. The new rules for this include a signed gift letter (no repayment necessary), but also the paper or wire trail from the donor to the borrower or title company. That can include a copy of the check made out to the borrower on the loan, the donor’s bank statement with no black outs to show they had the funds to gift and the corresponding deposit into the borrowers bank account or wire to the title company. This sounds simple, but is probably one of the biggest challenges to get this documentation correct.
HOMEREADY or HOME Possible
These conventional loans allow for 3 to 5 percent down, and can include flexibility for counting boarder income from a renter, non-occupant co-borrower options, or even counting wages from other household members not going on the loan. This is useful for qualifying retired home buyers on fixed incomes. They can use an adult child’s income to qualify if they can document a history of living together. These loans provide improved interest rate pricing compared to regular conventional loans. Some lenders will cover the appraisal fee up to $525.
High Balance Loan
For clients able to put 10 percent down and looking for loan amounts up to $679,650, there is a conventional loan with no Mortgage Insurance that is much less expensive than having to use a jumbo loan. Jumbo loans (loan amount greater than $453,100 for most counties) follow different underwriting rules and usually carry higher interest rates. Not all lenders offer this loan, so be sure to ask me about this one!
With 5 to 10 percent down, the option of doing a 1st and 2nd loan in order to avoid mortgage is an option.
All these options do have specific criteria for credit and income that need to be met.
Wanda Norge, Mortgage Consultant, Certified Divorce Lending Professional (CDLP), Equilane Lending, LLC (NMLS: 387869), lending for 15 years. Phone: 303-419-6568, firstname.lastname@example.org, www.wandanorge.com. NMLS:280102, MB:100018754