You Might Be Surprised to Hear YES!

If you are like many of the renters Bankrate recently surveyed, fear may be standing in the way of owning your first home. Nearly half of the people surveyed believe they either can’t afford a down payment (29%), or their credit isn’t good enough to qualify for a mortgage (16%).

But are these assumptions based on facts, or are some of these potential buyers unaware they may already be “mortgage-ready?” When you factor in eligibility for homeownership programs that offer down payment or closing cost assistance, more people may be ready to buy than they realize.

And there is no shortage of homeownership programs across the country! According to Down Payment Resource, a nationwide databank for homebuyer programs, there are more than 2,400 such programs throughout the United States. Seventy percent of these programs focus on down payment and closing cost assistance, while 63 percent target first-time homebuyers (a buyer who has not owned a home in the past three years).

Options. Options. Options.

So what does it take to qualify for one of these programs? It depends on a wide range of variables, from where you live to the kind of job you have. Here is a sampling:

  • FHA – FHA loans are insured by the Federal Housing Administration and allow PrimeLending to offer customers an affordable interest rate, a low minimum credit score requirement, and low down payment options. In fact, the down payment could be as low as 3.5 percent of the home’s purchase price. This is the go-to program for many Americans, especially first-time homebuyers and those who have a credit history that’s less than perfect.
  • VA – For American veterans or active duty military, VA loans as guaranteed by the U.S. Department of Veterans Affairs, are a great way to buy a home. With a VA loan, the borrower doesn’t have to make a down payment or pay mortgage insurance premiums, which can save a significant amount of money over time. Be forewarned, the red tape can be slow and challenging, but a knowledgeable loan officer will know how to navigate through the VA loan process as quickly and seamlessly as possible.
  • USDA – Borrowers don’t have to live on a farm to be eligible for the U.S. Department of Agriculture (USDA) homebuyers assistance program. The program extends up to 100 percent financing for qualified buyers in rural and suburban areas, plus most of the closing costs can be worked into the overall amount of the loan. There are income limitations, which vary by region. A local PrimeLending loan expert can help evaluate whether a USDA loan makes sense given the situation.
  • HomeReady® by Fannie Mae – HomeReady® mortgages offer highly flexible options and expanded eligibility guidelines, such as down payments as low as 3%, allowing extended families to live in the home, and accepting additional income sources from family members who live in the home, but aren’t listed on the loan, in order to qualify. Gifts and grants can also be used as a source for down payment or closing costs. There is a homeownership education requirement for borrowers to help ensure first-time homebuyers are set up for success.
  • Freddie Mac Home Possible® – Freddie Mac Home Possible mortgages are an excellent option for first-time homebuyers. With the 97% LTV (loan-to-value) financing program, a down payment of only 3% is required, but you can pay more. Like with Fannie Mae, the down payment can be a gift or grant. Available products are in 15-, 20- and 30-year fixed-rate terms, and required credit scores vary.
  • 203K Renovation Loan – The FHA 203K renovation loan is great solution if the borrower’s first home is a fixer-upper. There are flexible credit qualifications to get approved and the loan can cover the value of the property plus the repair costs, or up to 110% of the estimated property value after the repairs are complete. For a new home purchase that requires repairs, there’s a low minimum down payment requirement of only 3.5%.
  • NeighborhoodEdge™ Closing Cost Assistance – PrimeLending offers up to $1,500 in closing cost assistance for qualified homebuyers in select states, plus Washington D.C. Conventional, FHA, and USDA programs are eligible. There are additional requirements, including that the property must be located in a low-to-moderate census tract (LMIT). NeighborhoodEdge™ is available in Ariz., Calif., Colo., D.C., Fla., Ill., Mass., Minn., N.C., Nev., Pa., and Tex. NeighborhoodEdge™ is just one of many closing cost assistance programs a PrimeLending home loan expert can walk you through.

Feeling Overwhelmed? A PrimeLending Expert Can Help!

As you can see, we’ve just scratched the surface on the options we offer. But do you know which programs you should apply for? Before you surrender to another year of feeling “unready” to buy a home, we suggest you talk to a loan officer. Without a doubt, you will walk away with greater knowledge and understanding of the options available to you, plus the peace of mind that you have an advocate to guide you through the process.

Whatever your unique financial or personal needs may be, PrimeLending has the programs and services that will fit your lifestyle.  If you are interested in purchasing a home, you probably have more options than you think.


From the PrimeLending blog by Mandy Jordan