California Giving Away Down Payment Funds For Free!

We have received a ton of questions recently regarding the California Housing Finance Agency's (CalHFA) new program that offers a 10%, forgivable, interest-free loan to first-time homebuyers. So, we want to clarify the program's guidelines and touch on some serious tradeoffs buyers should consider.Read More

What Is The Optimal Down Payment? Hint: It’s Less Than You Think

All too many homebuyers mistakenly believe that they need to put down as much as humanly possible for several reasons: (1) they want to minimize their housing payment; (2) they want to minimize their debt load; and (3) they want to make their offers appear stronger. We, however, often advise buyers to put down less […]Read More

Rent Credits For Down Payment Funds

This is a quick reminder that renters can use “rent credits” towards their down payment. The entire down payment can be in the form of a rent credit in fact. The amount of the credit is the cumulative difference between the “Market Rent” and the “Actual Rent” paid. For example, if the market rent for […]Read More

Gift of Equity Instead of Down Payment – When Family Sells to Family

Gift Of Equity This is a reminder that sellers can “Gift Equity” as all or a portion of a down payment. If the entire down payment is a “Gift of Equity,” it needs to comprise at least 20% of the purchase price. If the Gift of Equity is less than 20% of the purchase price, […]Read More

10% Down With No PMI; Overrated?

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Down Payment Assistance – Requires Seller Credit for “No Cash Out of Pocket” Closing

I blogged Thursday about Down Payment Assistant Programs and about the Chenoa program in particular. We received a lot of positive responses but I still sensed some confusion in regard to one of the points I made. THE NEED FOR SELLER CREDITS If buyers have very little cash on hand, they will need a seller […]Read More

3 Reasons to Make Smaller Down Payments

We recently had a borrower with ample income and about $70,000 of liquid assets try to squeeze into a $600,000 home with 10% down. She wanted to put as much down as possible to minimize her housing payment. We instead talked her into putting 3.5% down and using FHA financing for the three reasons discussed […]Read More

Unison – 10% Down Payment Assistance For Small Share of Appreciation

Unison is a company that contributes funds towards a purchase in exchange for a percentage of a property’s appreciation. Again – Unison only takes a share of a property’s appreciation, and not a share of the “total equity” like many people mistakenly believe. This type of down payment assistance is excellent for: Buyers with tight […]Read More

3 Ways to Avoid PMI When LTV Is Over 80%

There are 3 ways to avoid monthly Private Mortgage Insurance (PMI) when a down payment is less than 20%: (1) Combo Loans; (2) Lump Sum or Single Payment PMI; and (3) Lender Paid PMI. Combo Loans employ 2nd mortgages to cover the loan-to-value portion that is over 80% (eliminating the need for PMI). We can […]Read More

Consult Lender Before Moving Money; Paper-Trailing Assets

We recently had a Realtor remind his client to talk to us before moving any money around, and it was a very pleasant surprise. Most Realtors and borrowers do not realize how stringent lenders have to be when paper-trailing all assets used for reserves, down payment funds, and closing costs. Today’s blog is a quick […]Read More

Funds To Close; Every Dollar Accounted For; Don’t Move Funds!

One of our biggest hold-ups at closing is accounting for every dollar used for down payment and closing costs (funds to close). Lenders are now required to paper-trail every dollar used. This means every large deposit has to be “sourced” and every check to escrow has to come from a verified account (both withdrawals and […]Read More

Converting “Cash” to Down Payment Funds – Gifts

We frequently have borrowers with substantial sums of cash that they want to use for a down payment. They cannot simply deposit the funds in escrow or into their bank accounts b/c lenders will want to know where the money came from. Lenders prohibit the use of un-sourced and unseasoned funds in all transactions. Buyers […]Read More

“Gift Of Equity” For a Down Payment Instead of Cash

This is a reminder that sellers can “Gift Equity” as a portion of a down payment. With conventional financing, a “Gift of Equity” can comprise the entire down payment if it is 20% or more of the purchase price. If the Gift of Equity is less than 20% of the purchase price, buyers must still […]Read More

Put Less Down and Pay Off Car or Consumer Debts

We had a borrower last week who was getting a gift of $40,000 to buy a home with FHA financing. FHA of course required a much smaller down payment but the borrower wanted to qualify for a higher purchase price by putting down more than what was required. The borrower, however, also had a $15,000 […]Read More

Post-Close HELOC to Reclaim Liquidity; 90% CLTV

We often encourage buyers to put down 20% or more not just to avoid mortgage insurance, but also to make their offers much stronger and to allow us to close in 14 days (80/10/10 financing with two loans requires 21 days). Buyers are often reluctant to deplete their liquidity, borrow from 401ks, or access gift […]Read More

CHDAP: Buying $400,000 Home with $2,000 Out of Pocket; 1/2% Down

We just approved two buyers this week for our CHDAP (California Homebuyers Down Payment Assistance Program), and it reminded us to blog about the program. CHDAP allows buyers to purchase a home with only 1/2% of the purchase price for a down payment. CHDAP Buyers can purchase a $400,000 home with as little as $2,000 […]Read More

Realtor Commissions Credited for Closing Costs & Down Payment (Gift)

Realtors can credit their commissions toward recurring and non-recurring closing costs. This is well-known. What many Realtors do not know is that they can “gift” all or a portion of their commission towards a down payment as long as the buyer is a relative. Almost anybody can be a relative, however. Jay Voorhees Founder/Broker | […]Read More

Using Lender Credits For Closing Costs; Just Need Down Payment

We had a borrower come to us over the weekend who wanted to buy a $400,000 home with FHA financing, and she had exactly $14,000 for a down payment (just enough). She had no money for closing costs which will be about $10,000 for non-recurring and recurring costs (including impounds). The solution in this competitive […]Read More