Show Me the Money to Buy a Home!

There are a wide variety of financial assistance programs that help you achieve your dream of home ownership. Many home buyers either don’t know about these programs or think they don’t qualify. You just need someone to show you the money. And contrary to popular belief, you could quite possibly qualify for an amazing array of layered benefits.

Home buying is intimidating when you are unfamiliar with the process and terminology, not to mention the myths. It keeps you immobilized. So let’s get educated and moving forward.

Myths Abound!

THE REALITY IS:

– You DON’T need almost perfect credit
– College loan debt MAY NOT be an obstacle to qualification
– You DON’T always need 20% down payment to avoid paying mortgage insurance as with conventional loans
– You DON’T have to live out in the boonies
– You DON’T necessarily have to be low income to be eligible
– You CAN use your IRA funds to buy your first home without paying a penalty for early withdrawal!
– Not all programs are just for the first-time home buyer. Move-up borrowers and retirees can partake too.

In fact, some lenders define a first-time home buyer as: A) a person who has never purchased a home; B) a person who has not owned a home in the last 36 months; C) a person who has gone through a major life change with documentation such as: divorce, death, or deployment.

free moneyHow much can I get?

There are hundreds of millions of dollars available to cover your down payment and closing costs from a variety of sources nationwide to help you buy a home. Federal, state and local housing finance programs provide the money… even ZERO out-of-pocket plans!

There are 2,290 down payment programs across the country waiting for home buyers to apply for funds, according to a joint analysis recently issued by RealtyTrac, a real estate data provider, and Down Payment Resource, a purveyor of home-buyer assistance programs. The average amount of down payment assistance per buyer is$11,565, according to the analysis.

Then, it is also possible to layer programs together, like one for the down payment and one to cover closing costs.

Let’s take a look at some of these affordable lending programs:

Government-sponsored Loan Highlights

These first-mortgage loans carry an explicit guarantee from a federal government agency. The loans themselves are originated by private lenders who apply to the applicable government agency for the guarantee on the loan.
Freddie Mac “Home Possible” loan
– As low as 3% down payment financing of a home’s purchase price
– 30-year fixed interest rate mortgage loan
– Typically 620+ credit score
– Flexible underwriting permits lenders to use make-sense guidelines when necessary a la for student loan debt problems
– Available to first-time home buyers, move-up buyers and retirees
– For low & moderate income borrowers

Fannie Mae “Home Ready” loan
– Guidelines similar to Home Possible loan by Freddie gov’t. agency
– A “green” loan that allows $100K for home repairs or green/energy-efficient upgrades

FHA 203(b) loan
– As low as 3.5% down payment financing
– 30-year fixed interest rate mortgage loan
– Typically 580+ credit score
– 50-55% debt-to-income ratio
– FHA allows the Lender or Seller to pay a maximum of 3% toward Buyer closing costs
– Has an upfront fee which is added to the loan amount at closing and an annual fee which is divided up (by 12 mos.) and added to your monthly payment for the life of the loan, thus increasing the size of the monthly payment.

FHA 203(k) loan
– Similar to standard FHA(b) loan, but is a purchase and rehab (up to $35K) financing plan in one loan

VA (Veterans Administration) loans
– ZERO down payment financing
– 30-year fixed interest rate mortgage loan
– Typically 620-640 credit score
– 41-45% debt-to-income ratio
– Minimal closing costs to the buyer
– Has a funding fee; borrowers have the option to pay it upfront at closing or roll it into their monthly mortgage payment. No additional fees thereafter.
– Must be an active duty service member or an honorably-discharged Veteran.

USDA  (U.S. Dept. of Agriculture) 502 loans
– ZERO down payment financing and low interest rates
– 30-year fixed interest rate mortgage loan
– Typically 580-620 credit score
– 41-50% debt-to-income ratio
– The program allows the Lender or Seller to pay ALL closing costs
– Has an upfront fee which is added to the loan amount at closing and an annual fee which is divided up (by 12 mos.) and added to your monthly payment, though it declines each year.
– There are geographic restrictions of where the home can be located to qualify
– There is an income limitation; cannot earn more than 115% of the area’s median income, which varies by county.
(In Austin, TX, Travis county, you could earn as much as $89,500. per year and qualify!)

layered benefitsLayer the Benefits, Baby~

Also part of the first-mortgage loan origination process, are MCC programs (Mortgage Credit Certificates). They are federal income tax credits administered by state and local housing agencies to help first-time home buyers and can be layered together with FHA, VA and other state loan programs. (Not all states have MCCs and programs vary.)

– The MCC credit is worth 15-20% of the mortgage interest that the
borrower pays each year on their loan

– It is applied as a credit to the federal income taxes that the borrower owes each year; usually $1000-2000. a year, every year they own the home

– This value of the MCC credit can be added to the borrower’s loan
application as extra income to boost their buying power!

– In Texas, “first-time home buyers” includes people who have not owned
a home for three years.

down payment assistanceUsing Texas, here is another example of layered home-buying assistance programs, administered by the State Affordable Housing Corp.The “Homes for Texas Heroes” and “Home Sweet Texas Home” loan programs are low interest-rate loans paired with down payment assistance Grants.

The Homes for Texas Heroes loan programs are available for veterans; teachers; teacher’s aides; school librarians; school nurses / counselors; college professors for nursing or allied health programs; fire fighters, EMS personnel; police and correctional officers; county jailers; security officers; peace officers and low and moderate-income homebuyers. Otherwise, the Home Sweet Texas loan programs are similar for non profession-specific buyers.*

These loans and home down payment assistance programs are available anywhere in Texas through a network of lenders and provide the following benefits:

texas down payment help– A 30-year fixed interest rate mortgage loan
– Down payment assistance % is based on the total mortgage loan amount
– The down payment assistance is a gift that never needs to be repaid.
– No upfront points or fees are taken out of the down payment assistance
– You do not have to be a first-time homebuyer
– You do not need to live in the home for any set period of time
– Generous debt-to-income ratio of 45-50%

*Individual buyer must be at or below 80% of area median family income. Travis, Hays, Williamson, Bastrop and Caldwell counties; $61,440 – 88,320 depending on which program. 640+ credit score.

This is a broad overview. Regional and local lenders have additional programs. New construction builders also offer wonderful plans and incentives.  I can guide you to the best mortgage programs for your specific needs and counsel you through the paperwork for smooth sailing to closing on your new home.

Roll through to the rest of my series:Why Should I Buy a Home vs. Rent?”;  “How Can I Afford to Buy a Home?!”;  “The Benefits of Buying New-construction Homes vs. Pre-owned”; “All About Boosting Credit Scores”  and “What is Debt-to-Income Ratio?


“So, who can help me with all of this?”, you may be asking. Someone who specializes in homeownership subsidies and mortgage assistance programs– certified in course training.

Not all Realtors are created equal, a la car mechanics or hair stylists. Many don’t have all the tools in their toolbox. They operate with the only the basic skills of their craft. Many cut corners. Like Realtors® who choose to easily line their pockets by dealing with only flush clientele and high-priced homes.

Keller Williams RealtyThink of me as, Gina, your New Home Guru. More Savings. More Living. I am more motivated and able to do a great job to help you affordably own your next home. If you want to own a home in the Austin area, reach out.

Pull the trigger, you’ll be glad you did. I will show you the money!

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