Welcome back from Summer, DC home buyers! We hope that this Summer was full of fun, adventure, and relaxation. The housing market is heating up and we are all preparing to do what we can to help make home buying dreams a reality. Talking to our agent partners, it has become clear that the need to be creative with our first-time home buyers is a top priority. The mortgage market has listened over the past year and has created an opening for products that help to support the first-time buyer in an aggressive, seller favored, market. As a result, we thought we would highlight a few loan programs that are excellent options for first-time home buyers. We believe these products allow buyers to present attractive offers to sellers while maintaining a manageable down payment and low monthly payment.
1. Grant Programs / Down Payment Assistance
a. Down payment is either a forgivable grant OR second lien with low monthly payment.
b. Helps to alleviate the need to spend all liquid assets on down payment and put buyers in a better position on “move-in day.”
c. Reduced monthly mortgage insurance rates to keep monthly payment low.
d. Flexible qualification guidelines.
2. Home Ready and Home Possible
a. Fannie Mae and Freddie Mac specific programs geared also towards low down payment and low monthly payment.
b. The option of a 3% down payment with low or no mortgage insurance.
c. Lower mortgage insurance rates.
d. Allows for a greater amount of seller paid closing costs.
3. FHA Loan
a. While this is one of the more traditional loan products, it maintains a position as a great program for buyers who have a lower credit score or less established job history.
b. Mortgage insurance rates are not dependent on credit score, which creates a safety net for lower credit score buyers.
c. Only 3% down payment required.
4. Rehab Loan
a. Allows buyers to extend the search area for homes and move into areas that may have less competition.
b. Because the market has become more competitive, this loan help to ensure the buyer doesn’t need to give up many of their “wants” or “needs” in what they are looking for in a home to end up in the neighborhood they desire.
c. Borrower can create and build their desired home and create instant value in a property.
d. Gives the borrower the opportunity to update their existing home to make it “the one.”
We often find that misconceptions about down payment requirements and credit score requirements deter buyers from entering the market. Overall, we believe that in highlighting these programs we would be remiss not to also highlight the importance of working with a team that you trust. It is important to find an agent and loan officer that you trust to keep your best interest front and center. There are so many great loan programs out there, especially for first-time home buyers!
*This comparison is based on estimated figures and is not a loan commitment or guarantee. This information is designed for educational and training purposes only.
