With home prices rocketing up across the nation, more and more homebuyers are beginning to feel that purchasing a home may just never be in the cards. Fortunately, there are a lot of homebuyer assistance options that can help turn owning a home from a dream to reality. In this article we’ll discuss how homebuyers can get a home with little to no down payment and achieve homeownership.
Lease-to-own Programs. In short, a lease-to-own program is a housing program where you rent a home (that you are interested in purchasing) for a certain period of time, and either during or at the conclusion of the rental period you have the option to purchase the home. There are a wide variety of lease-to-own programs,but the best ones don’t legally require you to purchase the home at the end of your renting period. The best programs also allow you to apply some or all of your rent payments toward the cost of the home, significantly lowering the mortgage amount over time if you do choose to purchase. A lease-to-own program can help get you into a home now if your credit is too low to qualify for a mortgage, or you don’t have down payment or closing cost funds. Then, it gives you the opportunity to purchase your dream home at a lower price in the future.
Gift Funds. Many borrowers aren’t able to afford a down payment or closing costs outright using their own funds and need to ask family or friends for assistance in the form of a gift. While this isn’t an option for every borrower, it’s a huge boost to the borrowers who do have the option. Other borrowers make a similar benefit for themselves by getting creative when checking with their support network for help, using websites like GoFundMe to fundraise, for example.
100% Financing First Mortgages. Some types of home mortgages—namely VA mortgages and USDA mortgages—provide 100% home financing. This means that, provided you qualify, your home mortgage will also cover your down payment and may even include some or all of your closing costs. These types of mortgages generally have some unique requirements to qualify—for example, VA mortgages are only offered to veterans, while USDA mortgages require the property to be in specific locations—but it never hurts to explore these options.
Down Payment Assistance Programs.
Down payment assistance programs are another really good way to help you afford a home. Most states, cities, and counties offer their own programs, and CBC Mortgage Agency offers down payment assistance with a program called Chenoa Fund. Some programs are even able to be combined to provide you with more assistance. If you are interested in down payment assistance (DPA), keep in mind some of the following common stipulations:
· Correspondent Lenders: Most DPA programs only work with lenders that have applied to offer that program. You can ask your current lender to let you know what programs they offer; you can also reach out to CBC Mortgage Agency about Chenoa Fund at chenoafund.org to request a list of lenders that offer the Chenoa Fund down payment assistance program in your area.
· Income Limits: DPA programs often have income limits relative to the county you plan on buying a home in, but not every DPA program does. Make sure to do your research so that you don’t find out that your income is too high to qualify for down payment assistance when you’re a week away from closing on a home! Here’s a quick tip: several Chenoa Fund loan products don’t have income limits, including FHA and FNMA conventional options.
· Credit Score Minimums: It’s common for down payment assistance programs to have credit score requirements of at least 620 or 640, although the specific number varies program to program. In addition, the rest of the requirements for a program may be more strict for lower scores and looser for higher scores. The Chenoa Fund program accepts credit scores as low as 600 for FHA loans and 620 for FNMA conventional loans.
To learn more about the Chenoa Fund down payment assistance program, check out our website to see how it may be possible to overcome homeownership roadblocks with down payment assistance.
CBC Mortgage Agency™ – NMLS 1186381
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Illinois Residential Mortgage License #MB.6761292. Illinois Department of Financial and Professional Regulation, Division of Banking, 100 West Randolph, 9th Floor, Chicago, IL 60601 – 1-888-473-4858. Georgia Residential Mortgage Licensee, License # 1186381.