We have buyers frequently looking to access “Homebuyer’s Assistance” or “Down Payment Assistance” programs offered by various cities and other non-profit entities. These are programs where a portion of an FHA down payment (usually 3%) is either gifted or loaned to the buyer at a very low rate.
We often discourage these programs because the lenders that allow for such programs often accompany them with much higher rates. Closing costs are often higher as well.
For example, we have a buyer looking for a $160,000 FHA purchase in conjunction with a 3% Homebuyer’s Assistance loan. She currently has $10,000, which is more than enough for a down payment on her own.
If she buys via FHA financing (with 3.5% down) and gets a seller credit for ALL closing costs (about $8,500 for recurring and non-recurring costs), she can buy the house with only $5,600 out of pocket.
In addition, if her credit scores are high, we can offer her a “no points” loan at 3.75%. She is far better off going this route than she would be if she pursued a down payment assistance program where her rate might end up 1/2 a percent higher than what we can offer.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167