Short on assets? No and Low Down Payment Programs can help you qualify for a mortgage to purchase a home

Short on assets? No and Low Down Payment Programs can help you qualify for a mortgage to purchase a home

This article will outline how no and low down payment programs can help you qualify for a mortgage to purchase a home, when you are short on assets.

Many prospective homebuyers are under the impression that you must have enough money saved in order to put 20% down on a home purchase in order to be able to pursue it.  That is certainly not the case.  There are several programs available that offer the ability for homebuyers to purchase a home with much lower or no down payment requirements.  Each has its own set of requirements and restrictions.  Here is a list of some along with a description of each.  Not sure if you qualify for any of them?  Please contact us through our online application or email either Jeremy or Angie at jjmcmichael@verizon.net or angie@aplusmortgagesolutions.com.

Conventional 3% Down (Standard Program)

This Conventional mortgage program requires only 3% down.  It does require that at least one applicant be a first-time homebuyer.  No non-occupant cosigners are permitted.  A specific online homebuyer education course must be completed by one of the applicants.  Maximum seller assistance toward applicants’ closing costs is 3% of purchase price.

HomeReady/HomePossible Programs

This special Conventional mortgage program is a 3% down program that offers a lower interest rate and reduced monthly MI compared to the standard Conventional 3% Down program.  It does not require that any of the applicants be first-time homebuyers, but does have applicant income restrictions.  The total of qualifying income (combined for applicants on the loan) must be under the limit for the program.  This only applies for income being used to qualify and only for applicants on the loan (i.e. the income limit is not a household income limit).  No non-occupant cosigners are permitted.  A specific online homebuyer education course must be completed by one of the applicants.  Maximum seller assistance toward applicants’ closing costs is 3% of purchase price.

FHA

This is a government-sponsored program that requires a minimum of 3.5% down with a middle credit score of 580 or higher (10% down is required for credit scores from 550 to 579).  It does not require that any of the applicants be first-time homebuyers and has no income limits.  This program permits lower credit scores compared to the Conventional Program and USDA Program and permits higher debt ratios compared to all other mortgage programs.  Non-occupant cosigners are permitted, but are limited close family members in order to obtain financing with 3.5% down.  Maximum seller assistance toward applicants’ closing costs is 6% of purchase price or the total of actual costs, whichever is less.

VA

This is a government-sponsored program that is only available to eligible Active Duty Military/National Guard/Reserves, Veterans of same or Surviving Spouse of a Deceased Veteran.  The latter is additional restrictions for qualifying.  The applicant does not need to be a first-time homebuyer.  An applicant that meets the VA eligibility requirements can pursue a mortgage with No money down with a middle score of 580 or higher (5% down is required for credit scores from 550 to 579).  The program limits cosigners to the spouse of the Veteran only.  No other cosigners are permitted.  There is technically no limit on seller assistance toward the applicants’ closing costs, but they cannot exceed the actual costs.  A qualified applicant can use this type of financing more than once.  VA charges the applicant a VA Funding Fee which can be financed into the  loan.  VA discounts the Funding Fee for the applicant using the financing for the first time.  If an applicant is receiving VA Disability income due to a service-related disability, the applicant is exempt from having to pay a VA Funding Fee.

 

USDA Rural Housing

This is a government-sponsored program that requires No down payment.   It requires that the applicant purchase a property that is located within a Rural-designated area.  The property cannot be a mobile home.  It is stricter on credit scores needed for qualifying (Minimum of a 640 credit score) and requires lower housing and total debt ratios (29/41, respectively).  The program does permit exceptions to the debt ratio requirements for strong applicants.  It does not require that any of the applicants be first-time homebuyers, but does have household income limits.  This means that income for any person, whether they are an applicant on the loan or not, that is going to reside in the property is counted toward the household income limit.  Maximum seller assistance toward applicants’ closing costs is 6% of purchase price or the total of actual costs, whichever is less.

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