7 WAYS TO BUY A HOME WITH LITTLE OR NO MONEY IN LAKE MARTIN

November 06, 2018

7 WAYS TO BUY A HOME WITH LITTLE OR NO MONEY IN LAKE MARTIN

Guest: Julia McCreight Ameris Bank

The economy is strong, rates are still good, and the real estate industry is hot. For people wanting to purchase a home but struggling to scrape up the down payment, there is hope. Many people in the Lake Martin area are aware that they do not need a 20% down payment. But, what you might not be aware of is that there are many programs available that require little to no money down. Below are seven ways for buyers with limited funds to participate in the dream of home ownership.

1. USDA Rural Housing Loans
The United States Department of Agriculture (USDA) Rural Development department offers 100% financing for homes located in rural areas. A borrower would pay a one-time guarantee fee that can be rolled into the loan amount, and an annual fee that is added to the monthly payment. There are restrictions based on income and location.

2. VA Loans
The Veterans Administration offers a 100% financing loan for military service members. Eligible members include veterans, reservists, active duty personnel, and select family members. This loan features flexible credit requirements, no down payment requirement and no mortgage insurance requirement. It also allows down payment assistance and closing costs funds to come from a gift or grant.

3. What is Step Up?
Step Up is a homeownership program designed specifically for moderate-income home buyers who can afford a mortgage, but need help with the down payment. The down payment funds are secured by a 10-year second mortgage and are combined with a 30-year, fixed-rate first mortgage. Since the loans are serviced by ServiSolutions, a division of AHFA, homeowners have only one check to write each month.
Program participants must complete a homebuyer education course to qualify. Participants who earn less than $97,300 are eligible for the Step Up program, regardless of household size or location.

Additional Information and Qualifications:

• HFA Preferred conventional or HFA loans only
• 3% down payment assistance available through Step Up
• For new or existing homes in Alabama
• Homebuyers must have a credit score of 620 or higher
• Debt to income ratio must be 45% or lower
• Homebuyers must complete a homeownership education course.

4. Ameris Doctor Loan
Ameris Bank offers the Ameris Doctor loan which provides up to 100% financing with no Private Mortgage Insurance. Eligible for these loans are MDs, DOs, dentists, pharmacists, and veterinarians (including residents and fellows). Because of the unique needs of medical
professionals, this loan takes into account the needed flexibility surrounding student loan debt, time on the job, and down payment requirement.

5. Down Payment Assistance Programs
Many state and county government agencies provide down payment assistance. These come in the form of grants or second mortgages that are forgivable or repayable. Your down payment assistance funds are forgiven over a predetermined length of time that you own the home when using a forgivable grant or second mortgage. Repayable grants or second mortgages offer the buyer a chance to borrow the down payment, which can be payed back over time at an affordable interest rate.
The funds can range from a few thousand dollars to several thousand dollars towards down payment and closing cost assistance. You could use the assistance to subsidize the down payment needed for a 97% conventional or FHA loan. However, many of these programs have income restrictions, so check with your local Ameris Bank mortgage banker (or your local state and county government agencies) for eligibility requirements.

6. HomeReady or Home Possible Mortgage Loans
These loans are conventional loans that are ideal for borrowers with limited savings. They require only a 3% down payment and allow this down payment and closing costs to be gifted. Additionally, these loans offer reduced rates on Private Mortgage Insurance (which is required). Once 20% home equity is reached, Private Mortgage Insurance for conventional loans can be cancelled (Unlike FHA loans). You could save money over the length of the loan this way. For income qualifications and more details visit HomeReady by Fannie Mae or HomePossible by FreddieMac.

7. FHA (Federal Housing Administration) Loans
FHA loans are one of the most flexible loan programs available, because:

o There are no income restrictions
o They only require 3.5% down (which can be gifted)
o A co-applicant is allowed, even though they may not live in the home with you.

This loan charges an upfront fee which can be rolled into the loan amount. It does require mortgage insurance. Mortgage insurance on an FHA loan cannot be removed and stays on the loan for the life of the loan.

The information voiced in this material is for general information and is not intended to provide specific advice or recommendations for any individual.