You Can Buy a Home with Less than 20% Down! Here’s how…
Denver Real Estate News
Home buyers in the Metro Denver real estate market will be happy to know they do not need to have a 20% down payment to purchase a home anymore. There are several alternatives to consider. Let me explain.
Homebuyers with 5% or less to put down:
FHA is the most common low down payment method for homebuyers. Using an FHA mortgage you can have a little as 3.5% down payment (plus closing costs) to qualify for a mortgage. Another interesting option, if you have a Rich Uncle or a very kind Mom and Dad, FHA will allow for “gift funds” to make that down payment on your behalf. You still have to have a good credit score and a means to continue making the payments, but this is an easy way to obtain a loan with little down.
Zero Down Payment Options for Homebuyers
Veterans Administration - VA Loans
VA Loans offer zero downpayment options for Veterans who have served our country. In general, active duty and honorably discharged service personnel are eligible for the VA program. In addition, home buyers who have spent at least six years in the Reserves or National Guard are eligible, as are spouses of service members killed in the line of duty. If you qualify you have the ability to purchase a Primary Residence (meaning a home you personally occupy) without paying a downpayment.
VA mortgage rates are often low compared to conventional financing. VA loans are a viable choice for military buyers putting down less than 20 percent.
NOTE: Many people are "fooled" into thinking you must go to a VA Lender to get a VA Loan. This is merely a "marketing technique. While there may be lenders to say they only do VA Loans, most lenders are fully aware and capable of doing a VA loan. So if you are eligible for a VA Loan, shop around for the best lender just like you would for a Conventional loan.
CHFA - Colorado Housing and Finance Authority
CHFA offers financing to qualified buyers with only $1000 down. Once again this is only for your Primary Residence. CHFA borrowers can have a debt-to-income ratio up to 50%, even if the credit score is below 660.
CHFA also has a program to benefit those needing help with the closing costs. They will provide assistance to qualified buyers of up to 5% of the purchase price of the home. The good news is, this assistance is in the form of a Grant and does not need to be paid back. But their is a catch! The interest rate will be higher than the normal interest at the time. This premium isn’t huge and it will enable buyers to get out of the Rent Paying Trap! So in the end it is very much worth the effort!
Provides down-payment assistance to the borrow in the form of a Second Loan. The first loan is 80% and the CHAC 2nd is up to 20%. The borrower needs to put $1000 ($750 for disability program) of his own funds to obtain this financing for costing costs and downpayment. CHAC offers this program throughout Colorado.
Metro Mortgage Assistance Plus
The Metro Mortgage Assistance Plus Program is a grant program designed to assist low and moderate income individuals and families (income not exceeding $95,880(couple)/$111,860(family or 3 or more). This program is available to buyers who qualify, it is not necessary to be a first time home buyer. A FICO Score of 640 or more is required and a debt to income ration of 45. Buyers must attend a HUD-approved homebuyer education class.
Borrowers for the Metro Mortgage Assistance Plus program must contribute at lease 1/2% of the mortgage amount on their own (no gifts allowed).
This time the only communities offering the Metro Mortgage Assistance Plus program are: Denver, Arvada, Aurora, Bennett, Boulder, Brighton, Broomfield, Castle Rock, Centennial, Commerce City, Dacono, Edgewater, Englewood, Firestone, Golden, Lakewood, Littleton, Parker, Sheridan, Thornton, Westminster, or Wheat Ridge. In addition, Arapahoe County, Jefferson County and Boulder county participate in the program within unincorporated areas. These areas are subject to change throughout the year, with a potential of other areas joining the Metro Mayors Caucus jurisdictions, so check with your approved lender for changes.
Localized Assistance Programs within Colorado
Various Counties within the State of Colorado offer mortgage assistance programs. Individual programs have various requirements. Most follow the standardized qualifying requirements as defined by HUD. Usually the borrower is required to buy within the city/county limits, attend a home buyer orientation/education class, submit a copy of the inspection report to the agency, occupy the property as their main residence, purchase price may not exceed a set-forth amount, and funds for the program must be available to for borrower to close. Yes, funding occasionally runs out so program availability may change.
Colorado Counties/City Programs in Metro Denver Area
Arapahoe County - partners with CHAC, CHFA and - Maximum Purchase Price 95% of the Area Median Purchase Price ($224,675 in 2013)
Aurora - Home Ownership Assistance Program (HOAP) - Maximum Purchase Price $228,000
Douglas County - Douglas County Housing Partnership - Maximum Purchase Price $300,000
Denver City and County
Downpayment assistance programs are plentiful and can be a boon to those serious home buyers who are lacking sufficient down payment to purchase a home. However the reality is in TODAY'S Real Estate Market FINDING a home is a different issue.
As a buyer's agent I am having to pull out every strategy in the book to find affordable homes and win the negotiation. My team is constantly training and learning how to find home for those Loyal Buyers who want to become home owners.
If this is you and you are committed to another agent, perhaps you should pick up the phone and give me a call! 303-589-2022
We believe an informed buyer makes the home buying process easier and understands the importance of taking care of all the details. That's why we offer a FREE BUYER CONSULTATION and Buyer Orientation Book to all of our Home Buyers.