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ZERO DOWN FINANCING
As you may already know FHA still allows for down payment assistance. The difference as of October 1st 2008 is that the seller may not contribute to the down payment. The good news is that family members, charities, and government programs may still contribute to the down payment.
Now it may be tricky to source the down payment monies especially if family does not have the money to contribute. The secret to finding the government and charity monies is finding a lender that specializes in these programs. I can not over emphasis when I say SPECIALIZES. Most lenders know of the programs but very few actually work with and have true knowledge of the available down payment programs. Finding the correct lender and actual program can be a waiting game. The good news is that millions of dollars are available throughout the year. The key with FHA down payment programs is to have a knowledgeable lender and patience in waiting for money to become available. My favorite program as to date is the USDA loan. This year alone I have helped over 10 families with the USDA loan. My favorite fact about the loan is that it is a true 100% financing program. Their is no need to have down payment assistance. The next best function of the loans is that you can add the closing cost to your loan making this a true %100 financing program. Thirdly there is no mortgage insurance so your payment can down over $80 a month if not more. FHA loans do have mortgage insurance built into the loan making USDA a cheaper way to borrow money. Here is a link to the USDA administrations web site. Now please understand that you may see many limitations as to income, geographics and so forth. This program to my experience so far has had a lot of grey area. I have experienced boundary exceptions to credit score waivers. Again this a situation where an experienced agent and lender will need to be on your side. Be sure to use our search tool on the right side of this site. We can help you with any questions regarding these proprams and structures at anytime. You may call us at 512-691-9385 Cheers-
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#1: 100% Financing
• With the elimination of seller funded down-payment assistance on FHA loans as of October 1st, 2008, the USDA loan program has become the only 100% financing option for homebuyers (aside from VA loans, which only veterans can qualify for).
#2: No Mortgage Insurance
• Any homebuyer who puts less than a 20% down payment when buying a home is required to pay private mortgage insurance or PMI (again, VA loans excluded here). PMI is additional insurance that is required above and beyond the principal/interest/taxes/insurance (PITI) payment. Not only does USDA allow for 100% financing, but it does not require any PMI.
#3: Competitive Rates (Even With Less Than Perfect Credit!)
• USDA also has excellent rates that are competitive with Conventional, FHA and VA, even if you have less than perfect credit. With USDA loans, you get the flexibility of a government loan program with the competitive rates of a conforming loan product.
#4: No Limit To Seller Concessions
• With it being a buyer’s market right now, it’s not uncommon (in fact, pretty standard) for the sellers of a home to contribute money to cover a buyer’s closing costs. On Conventional loans, sellers are capped at contributing 3% in seller concessions and on FHA loans the cap is 6%. With USDA loans, there is no limit to seller concessions!
#5: Developing Areas
• The overall goal of USDA is to develop outlying suburban and rural areas. As a result, a property must be located within an area that USDA considers rural or developing. For example, areas outside of Austin that are in the USDA area include Cedar Park, Leander, Elgin, Hutto, Buda, Kyle, etc. All of these areas have experienced significant growth as a result of the spillover of Austin’s growth, and this trend should continue. As a result, buyers who purchase homes in USDA loans have a very good reason to believe that the area they are in will continue to grow and the value of their home will continue to appreciate. Especially with the best loan program on the market ONLY available in those areas.