It doesn’t happen often but every once in a while a new program comes around that can really make a difference in the lives of potential homebuyers. loanDepot recently announced a program called accessZERO. The concept of the program is that there is an FHA loan as the first mortgage and then a second mortgage that covers the down payment. This second mortgage is not a grant, it is not limited to only first-time home buyers nor has a limitation on income.
There are first-time buyer programs but they have income limitations that often limit the buyer. There are the Veteran Administration loans with zero-down as well as the USDA loans but they have income and property limitations, which allows people who can afford a house payment but don’t have the down payment to buy a home.
The FHA loan limit for Jackson County is $472,000 which means you could purchase a home for about $488,000 with no money down. If you have a 600 credit score then you are allowed a 3.5% down payment second mortgage which covers the down payment on an FHA loan. However, if your credit score is 620 or higher then you can obtain a 5% second mortgage which will cover not only the 3.5% down payment but also 1.5% that can be used towards closing costs.
The second mortgage is paid over 10 years and the rate is 2% higher than the rate of the first mortgage.
If a buyer can negotiate with the seller to pay closing costs and or discount points to buy down the rate, that can be advantageous. I’ve written before about the value of naming terms rather than price.
Additionally, this combination of loans can be also used for multiplex units. Duplex anyone?
loanDepot offers reduced closing costs when our borrowers come back for a refinance. The idea is that if rates decline, then a refinance might make some sense.
I am happy to meet with you to discuss strategies to buy. We offer a wide array of loan solutions. Real estate is still the number one wealth builder in the country, don’t assume you can’t buy a home. Let’s run the numbers.