If this is the first time you hear about down payment assistance programs, this could make your day! Down payment assistance programs help home buyers with the cost associates with the purchase of a home. Qualifying for a home loan nowadays is easier said than done. To limit loan defaults and minimize risks, banks require up to a 20% down payment, low debt to income ratio and a credit score well into the 700 range. If you are a first time buyer with limited funds or are selling your current home and do not have much equity, what are you to do if you want to buy a home in the Charlotte real estate market, but don’t have enough saved for a 20% down payment – should you forget about owning a home altogether? Absolutely not. A FHA loan combined with a down payment assistance program could allow you to purchase a home with little or no money down. How does that work? Banks are willing to take on more risks if a loan is “insured” by the government. There are two types of government insured loans – FHA loans and USDA loans. FHA loans only require 3.5% down and a credit score as low as 600 (as of April 2011), whereas USDA loans are 100% financing – in other words, no down payment – which means that the full purchase price of a home is financed over 30 years. Down payment assistance programs (aside from USDA loans), work in conjunction with FHA insured loans. Basically, down payment assistance programs provide home buyers funds to cover the 3.5% FHA down payment, and in some cases, funds to cover closing costs (closing costs are usually anywhere from 3% to 5% of the purchase price).
Down payment assistance programs in the greater Charlotte real estate market
If you want to purchase a home in the greater Charlotte real estate market, but do not have enough money saved to pay for a large down payment and closing costs, a down payment assistance program might just be what you need to make the dream of home ownership a reality. Down payment assistance programs are Government and City sponsored programs that are available to help home buyers with their down payment and closing costs for the purchase of a home. There are nine main down payment assistance programs available in the greater Charlotte real estate market. Each down payment assistance program has its own set of advantages. The down payment assistance programs described on this site include House Charlotte, House Concord, NC Bond, USDA, HUD $100 Down Program, Homepath, NSP, GNND, and 5:1 Match.
A little history about FHA
The Federal Housing Administration (FHA) was established in 1934 during the heart of the Great Depression. The economic conditions of the time were very bleak. Unemployment was at 25% or more. If someone wanted to buy a home, the lending terms were very difficult, sometimes requiring 50% down payments, high interest rates, three-year to five-year loan terms, and a huge balloon payment at the end of the term. Only about 40% of all households owned their own homes. The FHA began by insuring loans for lenders. Because of this insurance, lenders were more willing to extend credit. To avoid the problems with mortgages in the past, the FHA developed the 30-year fully amortizing fixed-rate loan program. Borrowers were no longer faced with large balloon payments and could be assured that their loan could be paid off at the end of the term. This also provided lower monthly payments for borrowers. During the 1940s, new FHA programs were developed to help veterans returning home from World War II. Later, other programs were developed to help the elderly, the disabled and lower income Americans obtain home ownership. Most standard, conventional mortgage loans today require a down payment of around 20% of the purchase price (80% loan to value or LTV). This reduces the risk to the lender in case of default because there is a buffer between the current market price and the amount the lender is putting at risk to lend to the borrower. FHA is not a direct lender, yet works with private lending institutions to offer special loan programs that may help people purchase residential properties. FHA loans have more flexible approval requirements and lower down payments, even as low as 3.5% of the purchase price. FHA loans are only for owner-occupied, single family homes, condos, townhomes, or multi-unit homes up to four units. Commercial properties, apartment buildings, or other properties that would not be used as a primary residence, such as a vacation home, would not be eligible for an FHA loan. FHA loans also removed the requirement for three-year to five-year loan terms with large balloon payments. Instead, FHA loans instituted 15-year and 30-year loan terms with full amortization, meaning when the loan term ends, the loan is fully and completely paid off.
Down payment assistance programs – how we can help
We have spent much time researching, learning and mastering down payment assistance programs. We have put those programs to work to help many home buyers in the Charlotte area. Bottom line – it works, especially when combined with our unique real estate strategies. Down payment assistance programs are real and have helped thousands of families purchase homes in the Charlotte and surrounding areas. Read testimonials from past home buyers we have benefited from our expertise in down payment assistance programs. In our experience, most applicants do qualify for those programs and you too could receive up to $10,0000 in funds to help you with your down payment and closing costs when buying a home. Depending on the down payment assistance program we can help you qualify for, our streamlined process could allow you to move in a home in 45 days or less with little or no out of pocket expenses. In order to qualify for those down payment assistance programs, various factors are taken into consideration such as gross household income, family size, where you want live, credit score, debt to income ratio, price range, etc. We specialize in those down payment assistance programs for the Charlotte real estate market (as well as surrounding markets). If you have questions about any of the down payment assistance programs described and would like to find out if you qualify (it’s FREE for you to find out), call us today at (704) 322-3710 or email us, or complete the form to our right.