Jack's New Hampshire Real Estate Blog

Buying with little money down
December 14th, 2008 12:22 PM

You have heard the news about the mortgage crisis and the tightening of credit on the news; therefore I won’t get into it here. What I will tell you is that there are several options available for people with limited down payments.

FHA – The Federal Housing Administration (or HUD) offers a terrific loan program with competitive rates. They have more relaxed qualifying guidelines than conventional loans and have become the “New subprime” lender of choice. FHA does require a 3% down payment, but it can be a gift from a family member, employer etc. Closing costs can be rolled into the loan. Therefore if you get a gift, it is possible to go “No money down”. On the negative side, all FHA loans have a monthly “Mortgage Insurance premium” (MIP). MIP is FHA’s version of private mortgage insurance (PMI), which makes the effective rate of the loan higher (than if MIP was not required).

U.S.D.A. Rural housing has a true 100% financing program that will also allow you to roll in closing costs and up to $10,000 in repairs, since the loan amount is based on the appraised value and not the sales price. I have completed quite a few appraisals on this type of loan and the loan originators I speak with say that nearly 50% of the loans they write are USDA/Rural housing loans. Now, don’t worry…. This doesn’t mean you have to buy a house out in the sticks!!...lol… In fact rural housing loans are available in nearly all towns in New Hampshire except for the few of the cities such as Manchester, Nashua, Portsmouth etc. That means you can live in a town such as Bedford, NH which is adjacent to Manchester and has 25K residents and still qualify for “rural housing”.

New Hampshire Housing Finance Authority (NHHFA) offers the American Dream Program. This program allows buyers to purchase the property with only 1% down. Like the other programs, the closing costs can be rolled in. The best thing about this loan program is that NHHFA offers a grant, which is applied toward the sales price. Unlike the other loan programs, there are income limits to qualify for the loan. The limits vary based on the number of people in your household and the specific town. Here are a few examples….

4 person household in Goffstown…$61,500 limit

2 person household in Epping……$49,200 limit..

But HOLD ON…. If you buy a property in a “targeted” community, the income limits are WAIVED. If you buy in Manchester, Nashua, Laconia and several other communities there are NO limits on the what you earn to qualify.

These are just a FEW of the many loan programs that are targeted toward people with limited down payment. In a few days I will write how and tell you how people with BRUISED CREDIT can buy a home for themselves.

If you would like information on what loan program fits your situation, please contact me at:  jacklavoie@comcast.net

 

 


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Posted by Jack Lavoie on December 14th, 2008 12:22 PMPost a Comment

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