More Information About Zero Down
Posted by Pat Haddad at 11:10 pm. Filed under: General Indianapolis, Mortgage Rates
A sign next to a home saying “Zero Down” can often be misleading or bring confusion. To better inform you of how zero down works here are a list of the ways Capital Mortgage Solutions uses the term “zero down”:
1. Fannie Flex or Freddie Gold up to 417K;
2. 80/20 loans with the maximums at 80% at 417K and the 20% at 104K for a total purchase of 521K;
3. My Community can go up to 100% financing, but borrower income cannot exceed 63K in Central Indiana4;
4. VA financing up to 417K;
5. FHA up to 207K with Seller participation in a 3% to 5% Down Payment Assistance through a non-profit company such as Genesis, Own, Nehemiah, Ameridream, Futures, etc..this is the scenario that would require the Seller to agree to pay the 3% from proceeds at closing. In these situations if the comparables show that the home is reasonably priced, there is less room for negotiations. In fact, the purchase price may exceed the list price by a bit as long as the appraised value allows it.
Let’s keep in mind the zero down payment does NOT say zero investment. The buyer would still be required to pay closing costs, points and prepaids less property tax credits. In most cases though, if the buyer is tight on cash, we try to get the seller to pay for these items. Also it is important to keep in mind that these programs cost more either in points or in the rate because they are considered high or higher RISK loans. We try to use any extra money available to pay the points to keep the rate down and to meet debt to income ratios.
For questions and more information in regards to zero down, please contact us or our partners at Capital Mortgage Solutions.