| Q:
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Are
there low-down-payment home loans?
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| A:
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A host of private lenders offer low-down-payment
loans. In addition, there are government
programs to help cash-strapped buyers.
The
U.S. Department of Housing and Urban
Development offers a variety of
programs through the Federal Housing
Administration that require approximately
4 to 5 percent cash down. Loan limits
vary depending on the county where
the property is located.
Fannie
Mae's Community Home Buyers program
allows people to buy with just 3
percent down. For details, contact
lenders who offer government-insured
loans. In addition to calling lenders
for information, contact Fannie
Mae directly at (800) 732-6643;
fanniemae.com.
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| Q:
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Can
I get a HUD home for as little as
$100 down? |
| A:
|
If you are strapped
for cash and looking for a bargain,
you may be able to buy a foreclosure
property acquired by the U.S. Department
of Housing and Urban Development for
as little as $100 down.
With
HUD foreclosures, down payments
vary depending on whether the property
is eligible for FHA insurance. If
not, payments range from 5 to 20
percent. But when the property is
FHA-insured, the down payment can
go much lower.
Each
offer must be accompanied by an
"earnest money" deposit
equal to 5 percent of the bid price,
not to exceed $2,000 but not less
than $500.
The
U.S. Department of Veterans Affairs
also offers foreclosure properties
which can be purchased directly
from the VA, often well below market
value and with a down payment amount
as low as 2 percent for owner-occupants.
Investors may be required to pay
up to 10 percent of the purchase
price as a down payment. This is
because the VA guarantees home loans
and often ends up owning the property
if the veteran defaults.
If
you are interested in purchasing
a VA foreclosure, call 1-800-827-1000
or visit foreclosurefreesearch.com
for a
current listing. About 100 new properties
are listed every two weeks.
You
should be aware that foreclosure
properties are sold "as is,"
meaning limited repairs have been
made but no structural or mechanical
warranties are implied. |
|
| Q:
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How
can Fannie Mae help a home buyer?
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| A:
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Fannie Mae's
Community Home Buyers Program allows
first-time buyers with little cash
to obtain 95 percent financing. Participants
may put down as little as 3 percent
of their own money, with the remainder
permitted in the form of a gift from
family members, a government program
or nonprofit agency. Mortgage insurance
is required on all loans above 80
percent loan-to-value ratio when borrowers
do not use their own funds for at
least 5 percent down.
The
program is administered through
participating lenders. There are
income limits in different states.
However, the income restriction
is waived when borrowers participate
in the Fannie Neighbors program.
Fannie Neighbors also has lower
income requirements for borrowers
who want to buy in designated central
cities.
People
who are borrowing in either of these
programs must attend a seminar on
home ownership and the home buying
process.
For
a list of participating lenders,
call Fannie Mae at (800) 732-6643;
fanniemae.com. |
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| Q:
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Do
states offer help to home buyers?
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| A:
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Most states have a housing finance
agency, usually located in the state
capital, which offers help for first-time
home buyers.
(Florida's
is located at 227 North Bronough
Street, Suite 5000 Tallahassee,
FL 32301, (850) 488- 4197.)
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| Q:
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Is
PMI always required on low-down home
loans? |
| A:
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A growing number
of private lenders are loosening up
their requirements for low-down-payment
loans. But private mortgage insurance,
or PMI, usually is required on loans
with less than a 20 percent downpayment.
The Homeowners Protection Act states
PMI must be dropped on any loan originated
after July 29, 1999 IF it has a 78
percent loan-to-value ratio. |
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| Q:
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Do
I have to disclose a parent's gift?
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| A:
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Having generous
parents is nothing to hide. An estimated
one-third of first-time buyers purchase
their home with a loan or a money
gift from their parents.
Lenders
will ask for a gift letter stating
that no repayment of the "gift"
is expected. In addition to the
letter, a lender can ask for two
or three months' worth of statements
for the account where the down payment
funds are located. If the money
was recently placed into that account,
the lender may ask where it came
from and request verification of
that source as well. |
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| Q:
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How
do some of these low-down programs
work? |
| A:
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Most of the
private and government low-down loan
programs have special requirements.
These rules range from requiring borrowers
to be first-time home buyers to limits
on family income.
In
general, cities and counties require
that borrowers earn no more than
100 percent to 120 percent of the
county's average household income.
However, some programs such as the
Federal Housing Administration have
no income restrictions and do not
require the borrower to be a first-time
buyer.
Many
private low-down loan programs insist
borrowers have good credit and also
that they obtain private mortgage
insurance, which is a small monthly
insurance payment that insures the
lender against default. Some of
the city and county programs are
available only in targeted neighborhoods
where local leaders are trying to
spark reinvestment or increase the
homeownership rate.
Resources:
* "Unlocking the Doors to Homeownership,"
Freddie Mac publication 183; call
(800) FREDDIE; freddiemac.com
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|
| Q:
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Who
do I call for a low-down-payment loan?
|
| A:
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Here are seven popular programs available
to home buyers, along with the appropriate
telephone numbers for more information:
*The Federal Housing Administration
has programs which require as little
as 3 or 4 percent cash down. FHA loans
are originated and serviced by private
lenders. Check with local lenders
to find the best source for your loan.
* Veterans (and reservists) who qualify
can buy a home with no money down
through the U.S. Department of Veterans
Affairs. Call 1-800-827-1000 to find
out more.
* Both the VA and FHA offer foreclosure
properties for sale, some requiring
as little as $100 down. Anyone interested
in a VA foreclosure can call 1-800-827-1000
to request a current listing. For
FHA-insured properties, call your
local U.S. Housing and Urban Development
office for more information.
Fannie Mae helps buyers who can put
down as little as 3 percent of their
own money. To see if this can work
for you, call 1-800-732-6643.
* Many cities and counties offer special
housing loans in order to promote
the benefits of home ownership in
their communities. To find out what
funds may be available to you, inquire
at your local housing department.
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|
| Q:
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What
is a low down payment? |
| A:
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A low down payment is anything less
than the standard 20 percent. Many
people borrow with less than 20 percent
down by obtaining private mortgage
insurance, or PMI. There also are
numerous programs to help first-time
buyers with little or no down payment,
including FHA, VA and Fannie Mae's
Community Home Buyers Program. |
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| Q:
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Should
I put more or less down, if we can
afford it? |
| A:
|
Putting down
as little as possible allows buyers
to take full advantage of the tax
benefits of home ownership, many experts
say. Mortgage interest and property
taxes are fully deductible from state
and federal income taxes. Buyers using
a small down payment also have a reserve
for making unexpected improvements.
Other
real estate experts, however, advise
that it is more prudent to make
a larger down payment and thereby
reduce the amount of debt that must
be financed. |
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| Q:
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Are
there alternatives to low-down-payment
loans? |
| A:
|
There are a variety of alternative
financing arrangements such as equity
sharing, employer housing assistance,
seller-financing and lease options
that may reduce the size of the down
payment. |
|
| Q:
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Where
do I get information on PMI?
|
| A:
|
Look for tips in "A
Mortgage Insurance Guidebook,"
or "How
to Buy a Home with a Low Down Payment,"
available at the Federal Citizen Information
Center. |
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| Q:
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What
is Fannie Mae's low-down program?
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| A:
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Fannie Mae is
expanding the availability of low-down-payment
loans in an effort to help more people
nationwide qualify for a mortgage.
Two
new programs will help potential
buyers overcome two of the most
common obstacles to home ownership,
low savings and a modest income.
To
address many first-time buyers'
struggles to save the down payment,
Fannie Mae developed Fannie 97.
The program provides 97 percent
financing on a fixed-rate mortgage
with either a 25- or 30-year loan
term through Fannie Mae's Community
Home Buyers Program.
Fannie
Mae's new Start-Up Mortgage will
assist buyers with a 5 percent down
payment who are at any income level.
Yet applicants do not need as much
income to qualify and less cash
for closing than with traditional
mortgages. Borrowers will receive
a 30-year, fixed-rate mortgage with
a first-year monthly payment that
is lower than the standard fixed-rate
loan.
Freddie
Mac, Fannie Mae's counterpart, also
offers low-down-payment loan programs.
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