One of the major reasons potential home buyers stay out of the real estate market is the affordability of down payment and closing costs.
Buying a home is one of the biggest financial purchases most consumers will make and traditional mortgages require 20% down and buyer’s closing costs. So what if you meet all the requirements for mortgage approval but do not have enough cash?
Fortunately there are many loans and down payment assistance programs that are available to help you get into a home with little or no money down, here is a list of options that can help you achieve your goal of home ownership:
FHA Program:
The Federal Housing Administration mortgage is one of the most used loans for primary home buyers that have limited down payments and also will allow less than perfect credit.
The minimum down payment is 3.5% of the purchase price and this program will also allow the seller to contribute up to 6% of the sales price towards the buyer’s closing costs.
Another advantage is FHA loans will allow gift funds for the down payment and also non occupying co-borrowers if the buyer’s need help strengthening their total income and credit.
The FHA loan is often combined with first time home buyer assistance programs.
VA Loans:
The Veteran’s Administration Loan allows Veterans and their surviving spouses to purchase a home with no money down and limited closing costs. VA loans have more flexible income and credit requirements as they are designed to assist veterans on their path to ownership. To qualify the potential home buyer must obtain a certificate of eligibility which can be obtained online through the Department of Veterans affairs website.
USDA Loans:
Also known as rural loans this program requires no down payment for buyers of primary residences in non-urban areas. This loan has income limitations for potential buyers and allows for less than perfect credit. They also look at your total asset amounts as they limit their financing to those who do not have access to the 20% down required by traditional mortgages. For more on this program and to check property location eligibility visit the USDA website.
First Time Homebuyer Programs:
There are numerous programs that provide down payment and closing cost assistance to first time homebuyers, some of these programs have credit score and income limits.
Here is a partial list of the programs available in the State of Florida:
HHF Fund: This program will provide up to $15,000 for down payment and closing costs assistance ( fully forgiven after 5 years residing in the home) in the following counties; Brevard, Clay, Duval, Hillsborough, Orange Osceola, Pasco, Pinellas, Polk, St Lucie and Volusia. The rest of the counties in Florida offer assistance up to $7500 for first time home buyers. This program requires a 640 middle credit scored and is available with both a FHA and Conventional loan.
Sarasota, Charlotte, Lee County Grant Program: This program is a grant and is forgiven at the closing and will provide up to 5% of the total loan amount with a 660 credit score.
This program does not require the buyer to be a first time homebuyer and has higher income limits.
Local Ship Programs: Many local counties, cities and community organizations offer down payment and closing cost assistance in Florida. Almost all of these programs provide assistance based on your income, with more funds provided to the lowest income households. These programs usually get funding only once or twice per year and the fund availability is on a first come first served basis until the funds are used. I recommend researching the housing authorities in the area you are looking to buy to see program, requirements and when funds will be available.