How To Finance Home Purchase With Zero Down Payment
This BLOG On How To Finance Home Purchase With Zero Down Payment Was Published On July 10th, 2020
It’s crazy to think that many Americans think home buyers need a 20% down payment to own a home. THAT IS A MYTH.
- Of course, it does help to have 20% down
- Homebuyers will eliminate needing mortgage insurance
- Eliminating private mortgage insurance will save homeowners money over the life of the loan
- But how many Americans actually put down 20%?
- Not many!
In this article, we will discuss and cover How To Finance Home Purchase With Zero Down Payment.
Down Payment By Home Buyers
It is estimated that 87% of home buyers use a mortgage to obtain the property.
- So, remove the 13% who pay cash for their new homes, 60% of these Americans are first time home buyers, and put down an average of 6% or less
- Let’s be honest even coming up with 3% to 5% can be hard at times
- Rental payments may be higher than a mortgage payment
- The problem many Americans face is saving for the initial down payment
- This is a great opportunity to explore down payment assistance
Gustan Cho Associates participate in a down payment assistance program that helps many families make the American dream their reality!
Using Down Payment Assistance (DPA) For Home Purchase With Zero Down Payment
The CHENOA FUND is an amazing resource for potential homeowners.
- The Chenoa fund’s mission is to assist credit-worthy families to overcome the down payment barrier
- Main hurdles to homeownership are the down payment
- This down payment assistance program is something home buyers may want to look for
Let’s go over a few basics of this program.
Common Sense approach to underwriting. Let you know of the fund follows HUD 4001.1 guidelines, but does have a credit score requirement of 620 or higher.
- Must have a 620 + credit score
- First time home buyers or repeat home buyers
- No income or geographical restrictions
- No equity share or recapture provisions
Chenoa Fund To Finance Home Purchase With Zero Down Payment
What is the maximum figure for down payment assistance?
The Chenoa fund will only contribute 3.5% of the purchase price. (We will go over the details later in this blog)
- 115% or less of the areas’ median income = The down payment assistance can be forgivable
- 115% or less of the areas’ median income = The down payment assistance will be paid back through a monthly payment
The Chenoa Fund is helping underserved markets.
- Lower-income areas
Income Guidelines With Chenoa Funds
What is the average median income in my area?
Please visit HUD’ WEBSITE to look up specific County.
- Once you know your median family income for the county, multiply that number by 115%
- Let’s go over an example for LOS ANGELES County in California
- The median family income is $69,300, $69,300 * 115% = $79,695
- At this point, if your family makes less than $79,695 annually, you would qualify for the Chenoa Fund DPA Edge program
- This is when the down payment assistance comes in the form of a gift
- Soft/Forgivable Secondary Financing, or Repayable Secondary Financing
- Homeowners may not be required to pay it back.
If your family makes more than $79,695, the down payment assistance will be paid back in the form of 10 Year Repayable Secondary Financing at a fixed rate.
Please reach out to Gustan Cho Associates Mortgage Group for updated interest rates. Borrowers can contact us at GCA Mortgage Group at 262-716-8151 or text us for a faster response. Or email us at [email protected] The tea at Gustan Cho Associates can also answer any questions you may have with this program. This is still an amazing program, offering you the ability of 100% mortgage financing.
Closing Costs On Home Purchase With Chenoa Fund
How much will you need for closing costs?
Closing cost will vary from lender to lender.
- Since the Chenoa Fund uses FHA financing, the seller can contribute up to 6% of the purchase price to pay closing costs
- This is something you would want to talk to the realtor about
- You may be able to get a home with little to nothing out of pocket
- The Chenoa fund does take a common-sense approach to underwrite
Mortgage Guidelines For Chenoa Fund
What are some other important guidelines to use this program?
- Non- occupant co-borrower hours are only allowed for families under the median income requirements
- The borrower may receive a refund of documented earnest money and other third-party fees
- Manual underwriting allowed!
- May be used for single-family or two-unit properties
- Loan amounts will follow FHA loan limits
- Gift funds are allowed in accordance with HUD 4001.1 Handbook
- Chenoa Fund Programs not available in IL, MA, NY, SD, or WV
After reading this if you feel you may be a good fit for this program please reach out to Gustan Cho Associates. we will do all of the pre-approval work upfront, and issue a full loan commitment signed off by a certified FHA underwriter. You will be able to use our TBD UNDERWRITING PROCESS. Your realtor will love you for it! Take advantage of this fixed-rate mortgage product that could slingshot the success of your mortgage goals. we hope to hear from you soon