A program for home buyers who have established an excellent credit history but have not yet saved the required down payment or have chosen to use their savings to build assets in different ways.
Yes, we understand that sometimes saving the required down payment for a new home can be challenging. The good news is that through some of our mortgage lending partners and insurers, it is possible to purchase a home with no down payment. The Borrowed Down Payment mortgage program helps make it possible for you to start building equity in your own home without having to save for years.
The program has strict qualifying criteria and works when you can meet the following conditions:
If you don't meet the criteria you will have to come up with your down payment another way, perhaps gifted from a parent, sell something, or good old fashion savings.
To put this program together successfully, we have to put 3 things in place
Here are my general guidelines to determine if you are a fit for the program. If you think you are fit, we should discuss this further. The criteria can be summarized as follows:
Here is an example for what it would take to purchase a home priced at $300,000.
Per standard mortgage qualifying rules, for a $300K purchase you would require 5% down payment ($15,000) plus an additional 1% ($3,000) or more for the closing costs you will have (lawyer, property inspection, applicable taxes, utility connections, etc.). So you need a mortgage for $285,000 and a down payment loan for $18,000.
$1400/mo - your monthly mortgage payment (~half of this is your equity) (ex 3% interest, 25 year amortization)
$ 300/mo - the borrowed down payment loan repayment (ex. 6% Interest, 5yr term)
$ 175/mo - property taxes to the town or city
$ 110/mo - fire/property insurance
$1985/mo - TOTAL COST OF OWING YOUR OWN HOME - COMPARE THAT TO PAYING RENT
Guideline Income: to qualify for this mortgage, your household taxable income should be about 1/4th the house price or more. $300K/4 = $75K/yr as a guideline income. In addition your jobs have to be stable and very good credit.
I can customize numbers for you upon request. Did you want to talk and explore this calculation with some numbers closer to your situation?
Setting a goal to get your own home is a big deal and an exciting journey. It starts with a dream, followed by taking some initial "discovery" and "exploration" steps. At some point you get the first sense that "hey, this may be possible!" Before you know it you are looking at homes, then one day ... it's moving day and a place to call your own. I'm happy to be part of your journey....
Understanding mortgage finance is a key part in your plan and journey. To get a home, you need to be able to qualify for a mortgage. Your income needs to be stable and sufficient to pay your existing debts and the new mortgage, your credit profile has to show that when someone extends you credit that you pay them back on time and as agreed, and you have to have the required minimum down-payment, and - understandably - that can be hard to save in today's environment. For those with strong employment and strong credit, there may be a short cut for down payment, which we discussed above, called the Borrowed Down Payment Program, and there are other ways too.
How close are you to qualifying, whether zero-down or otherwise? You might be closer than you think. It starts with a conversation with a mortgage professional familiar with the program. For me, I can offer you short consultation over the phone to get a snapshot of your personal financial situation. I call this the "Discovery Call" and it only takes about 10 minutes for me determine the available solutions for your situation, location, and any potential obstacles. As the call unfolds, you discover that "hey, this may be possible after all" and here are the next steps to reach your goal. We go from there.
In short, we understand that sometimes saving the required down payment for a new home can be challenging. This program helps make it possible for you to start building equity in your own home without having to save for years. It's a solution that works for some.
If you want to explore further, please contact us, or you can request a review here.
As licensed professional mortgage brokers, we know exactly what it takes to qualify you for a mortgage and we do more than just get you a great mortgage at a great rate, we will show you the way, too.