Before the housing market crash in 2008-2009 it was possible to purchase a home with no money down. But once the market blew up everything went south for home buyers. Today, from time to time we still hear about that "no down payment" offer. Is it for real, or just a tactic to reel you in? The answer is a resounding yes. There are more options now than we have seen in over a decade.
These days, down payment assistance programs help low-to-moderate income buyers realize their dream of home ownership. Community assistance and Bond-money programs can be a great help in getting down-payment cash into the hands of hopeful buyers. Naturally, to avoid the perils of the 2008-2009 real estate mistakes, these money plans have income restrictions. These restrictions are limited to those whose income is less than 80% of the US Department of Housing and Urban Development's median income for the home's location. For example, in the Denver area a household can not earn more than $54,700 annually to be eligible for an assistance program. The problem with the popular Denver market is that home values are high and it is very hard to qualify for a home at that income level. What to do?
Be encouraged; there are solutions. But who do you trust?
It is important that one has an expert who understands how these programs work to get buyers into homes with no down payment. Traditionally, FHA is the loan program for first-time buyers with the minimum down payment of 3.5%. This is still the case today, but now we can get our down payment from a couple of sources. The first source is the previously mentioned assistance programs that limit your income to qualify. They lend or grant you the necessary down payment if you come in under the 80% median income restrictions. The second most popular money source is called CHAFA. This program is similar to an FHA mortgage with a down payment. CHAFA either lends or grants you the down payment. CHAFA income limits can go up to $130,200 annual household income which reflects the financial situation of more families.
Finally, there is a program that lends you that down payment and provides you with an FHA home loan with no income limits!
Clearly, the last option is the most promising option. The Mortgage industry now has a new innovative way to bundle the down payment and FHA home loan. An investor approves and funds the traditional 3.5% down payment FHA home loan, and then also approves and funds a second mortgage (at 3.5% of the home price) to cover your down payment. No out-of-pocket expense. There are no income restrictions for this program so anyone is eligible to acquire financing for a home.
It is now possible to buy a home with no down payment in today’s competitive housing race. The key is a qualified loan officer who's well experienced and knowledgeable about the options that suit your personal financial situation. For additional information contact your local expert Grant Brewster at The Mortgage Group of Colorado.