The 3.5% down payment can come from you or can be a gift from a relative.
There are closing costs which average about 3%-ish on top of this. But this does not need to be out-of-pocket. What we do is "finance" the closing costs when we write the offer...I normally recommend this anyway, why not have more reserves!
Let's take an example:
If you find a home that you are willing to pay $200,000 for. Let's say closing costs are $10,000. We will write an offer for $210,000 and then ask the seller to "pay" $10,000 for our closing costs. Does this make sense?
The down payment will be $7350 (3.5% of $210,000) and that can come from a gift from a relative or your savings.
Hope this helps...let me know if you have any other questions.
According to my preferred lender, the entire 3.5% down payment can be a gift from a relative or friend, and all the closing costs can be paid by another party - other than the buyer - as well. If that is accurate it would appear that someone - with the right connections - can still purchase a property with no money down - up to $417000., perhaps even higher.
By the way, as I answer questions about many areas, on this Forum, I don't work in Huntington Beach, as a rule, so I am not trying to solicit your business, in that community.
If you, or a friend of yours, decides to buy or sell in South County, then, with 32+ years of local experience, I would be honored to be able to assist you or them. Good luck in your search!
You may qualify to buy FHA with fico scores between 500-579 with 10% down or minimum 580 fico score may qualify FHA 3.5% down or as low as .5% half percent down payment program. You may consider 3% down conventional from a minimum 620 fico score.
You will need to be pre-approved if you decide to buy to be able to meet an agent to view and submit offers on any homes of your choice. Your qualifications will be determined by your credit profile, debt to income ratios, fico scores, home price, loan program and how much you want to invest into the down payment and closing costs.
If you figure out what cities/zip codes you are considering, minimum number of bedrooms and the maximum payment/price you are looking to achieve you can be emailed listings to fit your search criteria. Your email address is needed to set you up for the automatic daily updates.
It only takes a few dozen questions to qualify, go over your options and email you listings to study and compare. Here are some links to study as well as web reference links to many loan program pages offered...
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Check http://www.hud.gov to find out maximum mortgage limits in your area. Then align yourself with a good local lender to get approved and a good buyer's agent to find the right home and assist you with structuring your offer
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HERE ARE SOME OF THE REQUIREMENTS
1-Must not have owned a home in 3 years.
2-Must have been in the same line of work for 2 years
3-Must make more than 25k but less than 80k
4-Must have 1,000 to put into the deal.
5-640 minimum credit score.
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payment, Now this is a first time for me to go FHA. But, We have about 90% of our closing costs paid for us, NOT by the Seller, but by going FHA. So, If you read the FHA Guidelines it does say that you can have most of your closing costs paid for. And, No we are not putting this into or Loan either.
They do, however, help you up to the appraised value. Total closing costs is usually around $11,000 with FHA so they basically lie and say 3.5%. How many times you will actually buy a house that is FHA approved that appraises for more than what the seller is selling for?
Also, that good faith estimate? It will go up. Even when it seems like it's going down. They will slam you right before the closing. My closing cost was down to little over $300. My husband and I have made plans with the left over money we had after we pay this closing cost. Now the new estimate right before closing is $3000. That is after insurance and all kind of fees I have paid. Now we have no money left for any furniture for the house because we were naive like everyone else thinking we only had to pay 3.5% There ought to be laws against what they do.
Yes, the buyer does have closing cost. You can however ask the seller to pay a portion of the closing cost for you. This of course will be up to the seller to decide if they would like to help you.
Keep in mind if you write an offer on a short sale the seller will not most likely be in a position to help you with cost as they themselves are not in the best financial position.
You can also get a "gift" from friends or family to help you with cost. The giver will have to write a "gift" letter which simply confirms they are "giving" you the funds with no expectation of repayment.
(it can not be a loan)
Best of luck to you!
Kawain Payne, Realtor
Im buying a new townhouse in parkland florida, through centerline , Im since Im first time buy Im doing FHA 3.5 which is 3.9 now , the seller told that they were gonna give me $8000 as insentive for closing cost , I gave my 3.5% of my buy which is $279.00, now they do not want to give me the credit towards the closing plus they say if I dont buy I will loose my $10.000, that I gave for the 3.5 as FHA , there anything that I can do? I dont want to loose my money , the credit that they were gonna its on a paper that the agent gave thks
We do have loan programs with no closing costs. The seller can also pay your closing costs.
You have to negotiate that when you make your offer. We do loans all the time where the only thing the people pay is the 3.5%
A list of common closing costs:
-loan underwriting fee
-12 months of homeowners insurance
-3-9 mos of property tax and insurance escrow impounds (depending on when in the year you close)
-next installment of property taxes (if you are within 60 days of property tax due date)
You could call a local title companies to ask what the average fees in your area are to close.
In Miami, FL more or less it's about 2.5% of the purchase price needed to close.
Here is a list of just a few fees charged at closing: Recording Fee, Wire and Courier Fees, Endorsement Fee, Title Closing Fee, and Title Document Prep Fee
If you are in California there is a down payment assistance program that will give you 3% if you qualify for it as well.
In today's local - South Orange County - market, where houses in the $200,000. price range are greeted by multiple offers, and eventually selling for MORE than listed price, most sellers aren't open to making concessions, or paying closing costs - so, back to the original question - in my humble opinion it is better to line up potential gift scenarios before making offers, rather than expect a seller to go along with a scheme.
This is very standard proceedure. I'm surprised you don't know this! Lenders are quite used to seeing seller concessions on all offers, but you do know this!
In my example...I am obviously not talking about a home that is only "worth" $200,000 but one that might be listed at $225,000 or $210,000. But you know this...if not, I would recommend that you talk to your lender of choice, your clients might be using valuable cash reserves for closing costs when it's not necessary.
As for Karen's answer, I nearly spit out my coffee when I read her statement: "If you find a home that you are willing to pay $200,000 for. Let's say closing costs are $10,000. We will write an offer for $210,000 and then ask the seller to "pay" $10,000 for our closing costs. Does this make sense?"
Karen, it probably will NOT make sense to an appraiser. SOME lenders might even call it fraud.
Any or all the down payment, and ALL closing costs, in an FHA loan can be a gift. Yes, some of that CAN be from the seller, but that isn't too wise if it raises the price, and the appraisal doesn't come in.
Structuring costs to over and above the real value of the property is not usually a good practice. If there is enough flexibility in the price, then fine, ask the seller to pay costs or "buy down" the interest rate, but the house still has to appraise.
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Lastly, you have all your loan fees, which your good faith estimate will provide you.
All total, closing costs are generally 2 to 3%.