Everyone needs a place to live and buying a home is a significant milestone. The
financial requirements of putting down large sums of money to buy a home can be a
major barrier to making this dream become reality. I often get asked about first time
home buyer programs, and while there are not actually “first time” home buyer
programs, there are several options available for those looking to purchase a home with
no down payment. Essentially this would be any loan program that offers 100%
financing.
100% financing can be a great fit for some buyers and there are options that don’t
deserve all the negative scrutiny. I firmly believe that if you are going to have to pay rent,
and can qualify for a mortgage, you should buy a home.
You are spending the money regardless, if you are paying a mortgage, you are slowly
building equity, and that is valuable. If you are paying rent, you are building equity for
someone else.
This week we will explore various avenues that potential homebuyers can consider to
make their dream of homeownership a reality. These loans are not predatory in nature,
and are all great places to start if you qualify.
A quick guideline to help you identify whether you may qualify are credit and income
requirements. Most lenders require 1 year of consistent income source, a credit score
of at least 640 ( some 580-639 lenders do exist ) and no credit reported late payments
within the previous 12 months. Knowing these details up front should save you some
unnecessary heartache.
If you think you may meet this criteria, you could be aligned just right to use one of
these loans to start or upgrade your home ownership situation.
VA Loans: If you are a qualified veteran or active-duty military personnel, you may be eligible for
a VA (Veterans Affairs) loan. These loans often require no down payment, have competitive
interest rates, and no mortgage insurance fees. You will need a VA eligibility certificate to use
this program
USDA Loans: The United States Department of Agriculture (USDA) offers loans for rural
homebuyers with no down payment requirements. These loans are designed to promote
homeownership in rural areas. Locally, this loan can be used in Thomson, Graniteville, Harlem
and several other very popular communities. Check out the attached MAP, everything outside of
the tan marked areas may qualify for a USDA loan. USDA loans also have no mortgage
insurance fees added to the monthly payment.
FHA Loans: While the Federal Housing Administration (FHA) loans typically require a minimum
down payment, alone this is not a zero-down option, but this loan can be coupled with local
down payment assistance programs, which will in turn make it 100% financing. Some states,
cities, and nonprofit organizations offer down payment assistance or grant programs to help
homebuyers with their down payment or closing costs. These programs vary widely, so it's
essential to research what's available in your area, and know what it takes to qualify.
Gift Funds: If you have family willing to help you buy a home, they can give you “gift funds” for the down payment on several popular mortgage loans. Just be sure to follow any rules and regulations regarding gift funds set by your specific lender.
State and Local Bank Programs: Often local banks have mortgage funds that they committed to spend in their community. Locally, South State and Security Federal have some really great programs offering 100% financing. Just be aware that location and income limits may be tied to
these programs.
Before pursuing any of these options, it's crucial to consult with a seasoned real estate
professional and loan originator to understand the specific requirements, terms, and conditions
associated with each option. And just a reminder, your credit score and financial situation will
play a role in your ability to qualify for mortgage loans or assistance programs.
Now, who's ready to see if they can turn that rent money into something more rewarding??
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