FHA & Conventional Down Payment Money
You can use this process to get your 3% required down payment for FHA or Conventional Down Payment Money, or use this function to get your LTV (loan to value) below 80% without doing two loans. It’s all structure and planning before you contract, before you make an offer. A good Realtor® will get you there. A great Lender/Broker will close the deal.
If you can, always attempt to negotiate seller concessions. Never be afraid to ask for the maximum amount. Most Lenders allow up to 6% and that’s 6% you don’t have to worry about. It’s not as hard as you think, even in a sellers market.
Remember, structure – structure – structure – risk – risk – risk. Know your needs, and build your “Deal” around your contract. You will be amazed at what you can do!
Government Assistance is a little different in your initial resources are limited and they do tend to limit the amount of home you can buy, even if you can qualify for more. All that aside, should you choose to use Government Assistance, keep in mind the following:
- Typically it is a Silent Second – Non Interest Bearing Loan
- Typically, it does require a nominal cash commitment from the buyer
- Usually, they do charge an application fee
- They Typically will allow the use of other gift funds to complete the transaction (keep in mind, most lenders will only allow one assistance source)
- The home typically must pass a inspection for code compliance
- You must typically complete a First Time Home Buyer class
- Normally you must qualify for a low interest fixed rate loan
- There may be credit quality restrictions (RISK)
So, given we’ve jumped through the Government hoops, lets suppose two different scenarios. One using Government Assistance only. The other using a combination of Government Assistance and Gift Funds.
A buyer finds a home for $100,000.00. They qualify for $3500.00 in Government Assistance. The Realtor® negotiate 4% in seller concessions. Here is how this transaction will break down: