While pursuing real estate blogs recently, I came across one posted on a nationally known real estate website by a real estate broker who is also an attorney. The title was “5 Real Estate and Mortgage Urban Legends.” I was with her until she got to urban legend #3 . . . 100% Financing for First Time Homebuyers. According to the author, “Most of the national first-time buyer programs are mere figments of our collective mortgage memory”. Au contraire (as they say in France). In fact, I have clients who have used this product to purchase a home in DC and they are quite pleased with the process. Believe me, the author got an ear full from other agents who left comments telling her that they had clients who had used the program. So let me give you some facts.
First time homebuyer programs exist at most banks. They come under the Community Homeownership Incentive Program or “CHIP” for short. As I understand it, banks that received bailout money were required to have some type of first time homebuyer program and this is what they came up with. Actually, it’s pretty good deal. Those who qualify can get up to 100% financing with no money down, and with no private mortgage insurance! Here’s a thumbnail of the details, but please check with banks like, BB&T and Wells Fargo for detailed information about the loan (the loan is not available through corresponding lenders):
- Maximum loan amount – $417,000
- Maximum income limits (in the Washington, DC area): $103,900. No income limits in HUD designated underserved areas. (I can tell you how to find out if the home you want to purchase is in such an area).
- Term: 30 year fixed only
- Homebuyer Education: Required
- Approved down payment assistance program or qualified gift allowed
- Property: Single family residence, townhouse or condo
- Minimum buyer contribution: $500.00 (other possible fees include: home radon and termite inspections, pro-rated taxes, title insurance)
- Reserves: 97% financing – one month PITI, 100% financing – two months PITI
Buyer Credit Qualifications:
- No 30 day delinquencies within the past 12 months. Any derogatory credit must be explained. Collections may not have to be paid, but judgments must be paid off.
- Student loan payments will not be counted in debt as long as payment will be deferred at least 36 months from loan closing.
- For 100% financing, minimum credit score must be 660. No minimum for 97%.
- Non-traditional credit scores can be utilized. Minimum number is three sources of non-traditional credit.
Loans are subject to approval and the program can be discontinued at any time, so check with your local bank.
So don’t let lack of a down payment be the reason that you don’t purchase a home now. Contact me at any time! I’m happy to help! firstname.lastname@example.org (703-850-4330).