Buying a home can be both exciting and daunting. Many disappointed home buyers are now renting or feeling tapped out of the market by the high down payments of competing home buyers and higher interest rates.
The cost of a down payment and the need for a good credit score can often feel like an insurmountable obstacle, but the truth is that there are many loan options available that can help make the dream of homeownership a reality. There is new hope and new opportunities on the horizon!
Let’s begin with one such option. Down payment assistance loans. These loans are specifically designed to help buyers with a low-down payment. Many programs exist at the local and state level, and they can help cover a portion or even all of the down payment, making it much more affordable to buy a home.
Down Payment Grant
• Offering up to $12,500 or 4% of the purchase price towards down payment & closing costs!
• Conventional loan program.
• First-time home buyers.
• Primary residence only.
• 620+ credit score.
• Up 50 50% debt-income ratio
• Income capped at approx. $88,000 — borrower only, no household.
• 5 years forgivable — 20% per year, fully forgiven after 5 years.
FHLBank Atlanta’s First-Time Homebuyer Product (FHP)
• Up to $7,500 in funds for the down payments and closing costs of first-time home buyers.
• The home buyer must contribute at least $1,000.
• Purchase home must be used as the homebuyer’s primary residence.
• Income and other eligibility requirements apply.
• Funds are available on a first-come, first-serve basis.
Chenoa Fund Down Payment Assistance
• FHA loan program.
• 100% financing (down payment covers the 3.5%).
• Does not need to be first time home buyer.
• No income limits.
• FICO 600 minimum.
3% Down Conventional
• Fannie Mae Standard does not require first time home buyer. No income limit.
• HomeReady mortgage income limit: 80% Area Median income. Do not need to be a first time home buyer.
• Lower rate options if one of the borrowers is a first time home buyer.
• 620 minimum credit score.
Thankfully, VA loans are making a comeback in many areas. During the latest season in real estate when home values exploded due to low rates and an undersupply of homes, both VA and FHA offers were practically nonexistent and rarely accepted. This is now a favorable time to get back to the loans that many Americans used to buy their first home.
Veterans can take advantage of “no down payment” for their military service sacrifice. They typically require a lower down payment than traditional mortgages and can be a great option for first-time home buyers or those with limited savings.
Don’t feel that it’s hopeless if your credit score has been less than sterling. There are loans available for buyers with lower credit scores. This is a good time to take out all the stops and see if one of our loans that requires a lower credit score than the traditional 700ish range.
While having a good credit score is important when applying for a mortgage, it’s not the only factor considered. Many lenders offer programs for buyers with less-than-perfect credit, and these loans can often have more flexible terms and lower interest rates.
NC Housing
• $8,000 down payment assistance.
• Must be first time home buyer.
• Income limits are based on entire household income.
• Sale price limitation of $385,000.
• Conventional or FHA.
• 640 FICO minimum.
NC Advantage
• 3% down payment assistance.
• Do not need to be a first time home buyer.
• Income limits based on mortgage applicant only.
• No sales price limit
• Conventional or FHA
• 640 FICO minimum.
Affordable Housing Program
• Provides low-to-moderate income families and individuals with a grant.
• $12,500 for first time home buyers.
• OR $15,000 for “community partners” – current or retired essential workers (law enforcement, educators, health care workers, firefighters, first responders, veterans and active-duty military, or their surviving spouses)
• 640 FICO minimum.
FHIC Wake County Affordable Homeownership Program
• Grant for low to moderate income first time home buyers or current homeowners to avoid foreclosure.
• Forgivable one time loan up to $50,000 with no monthly payment.
• Household income at or below 80% area median income.
• 45% max DTI.
• No maximum sales price.
• Not available for homes inside Raleigh or Cary city limits. Eligible cities/townships: Apex, Fuquay-Varina, Garner, Holly Springs, Knightdale, Morrisville, Rolesville, Wake Forest, Wendell, Zebulon.
• Minimum 640 credit score.
Asset Depletion Program
• Asset depletion income can be coupled with other income. Two years of tax returns are still required on the loan.
• Maximum 80% LTV for primary and secondary homes. Maximum 60% LTV for NOO.
• All collateral types and occupancy including second home and investment properties allowed.
• Will use all eligible assets for the program at 100% face value if borrowers are 59 1/2 and older.
• Retirement funds are calculated at 50% of face value if borrowers are less than 59 1/2.
• Assets held in annuities and cash value of life insurance policies are ineligible for the asset depletion program.
• 600 minimum credit score.
Chenoa Fund Down Payment Assistance
• FHA loan program
• 100% financing (down payment covers the 3.5%)
• Does not need to be first time homebuyer
• No income limits
• 600 minimum credit score.
In years past, investor loans have notoriously been difficult to obtain and only went to large investors. That has changed!
Now you can begin investing in real estate with an investor loan and a credit score as low as 640! This is an amazing opportunity to own income-producing property. Many new investors are buying beach properties or mountain homes to use as Airbnbs. But there are also buyers that simply want a second home loan. Here are our picks for the best investor loans and second home mortgages:
Investor DSCR Loans – Debt Service Coverage Ratio
• This is a loan to help investors purchase homes but using the potential rental income.
• No traditional income documentation required.
• No limit to the number of properties owned.
• Can be interest-only.
• LTVs vary based on credit and rent-to-payment ratio.
• 640 minimum credit score.
ITIN Loans
• Primary or secondary homes or NOO occupancies.
• Up to max 80% LTV.
• Minimum loan amount $150,000.
• Maximum loan amount $1,500,000.
• Max DTI 43%,
• SFR, PUDs, warrantable condos & 2-4 units eligible.
• 640 minimum credit score.
What about the self-employed borrower who wants to buy a home? We are realtors, after all, and are self-employed!
12 Month Bank Statement Program
• One of the borrowers must be self-employed.
• 12 consecutive months of bank statements needed.
• Can use either business or personal bank statements. However, borrower must have a business account.
• Business must have been open for at least 2 years.
• Max DTI 50%.
• Condo lending available on this program.
What if you are a home buyer, but your potential homes you can be always seem to need an updated kitchen or bath? We have a great option for a renovation loan, and it even goes as low as a 620 minimum credit score. Talk about sweat equity!
Renovation Loan
• Loan based on post-renovation value of the home.
• 620 minimum credit score.
• 97% loan to value.
• Max DTI 45%.
Do not overlook all of the traditional loans available! For instance, the 2-1 buy-down loan has been popular because home buyers who expect rates to come down love the lower rates for the first and second year of the mortgage.
2-1 and 1-0 Buy-Down Home Loan
• Purchases only.
• Temporarily reduces rate for either first year (1-0) or first 2 years (2-1).
• Example: If rate is 6% on a 2-1 buy-down, then the first year is 4% and the second year is 5%. The third to thirtieth years are at 6%.
• Buyers can refinance anytime with no pre-payment penalties.
• Must be on primary residence.
• With our choice of lender – BOTH the seller and the buyer can contribute to the buy-down as well as the lender and even the realtor.
• Note: Must quality at higher long-term rate.
Conventional Home Loan
• Minimum down payment is 3%.
• PMI is required on any down payment less than 20% (can be paid monthly, upfront, or even lender paid).
• Loan term can be 10, 15, 20, or 30 years.
Questions? Not sure how to get started?
Kimberley Smith is your expert guide to NC loan programs! Reach out to her to get started:
984-789-8131
