Would 10,000 be enough for downpayment and closing cost?

Asked by Brenda408, 95111 Sat Sep 17, 2011

The loans I am leaning towards are fha and calfha. (because of low down payment) We are first time home buyers.
I believe our credit is excellent but haven't ran it since I would like information on what I should have to increase our chances on getting pre-approved for a loan.
We are looking for a loan no more than $120,000. My question is if we do qualify do you think 10,000 is enough for downpayment and closing cost. How much should we have in savings account?
( we dont not qualify for va loan as we are not veterans and usda loan as there is over 20,000 population)

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Ron Thomas, Agent, Fresno, CA
Sat Sep 17, 2011
Last First; from the research I've done, a lot of the area is approved for a USDA, I would want to look there first.
If you will give me your parameters, I will e-mail some possibles so that you can see if there are any available to you.

Barring a USDA loan, you might be able to make it on $10,000.
$120 probably makes it too.
We might be able to look for a HUD home too.
I have an excellent Mortgage Officer in mind who could help too.

Let me know if I can help.

Good luck and may God bless
2 votes
Jeanne (Geni…, Agent, Virginia Beach, VA
Sat Sep 17, 2011
Dear Brenda,
$10,000 is not very much if you need to use it for the down payment and the closing costs, but with the right loan and (because it is a buyer's market) the seller contributing the maximum amount allowed (vary with different type of loan) toward your settlement expenses, you more unlikely can do it. A portion your money can be used for your "reserve". You need to find a loan officer with a reputable Mortgage Company (do the face to face instead of the on line deal), get your pre approval letter and start looking at properties.
I did a quick search, and this link is just FYI, I hope it gives you an idea of what you can get.

Good luck to you.
1 vote
Kim Benedict, Agent, Overland Park, KS
Sun Sep 14, 2014
Talk with a mortgage broker as they can best help you and they have different programs that will help you in your situation, and if one bank don't have any thing try serval others till you find one that meets your needs. There are programs you can find on the internet for 1st time home buyers that can help with closing costs, and gift money is always good to help too...
0 votes
Jose Salazar, Agent, Los Banos, CA
Sat Sep 17, 2011
Hi Brenda,

Yes, $10, 000 should be enough to purchase a home of approximately $125,000, but you would probably need closing cost assistance to be sure, either paid by the seller (varies, up to 3.5%) or by other mortgage programs such as CHF Platinum which assists buyers with 3% for closing costs but is only offered by selective mortgage lenders and is currently on hold (could become available in October 2011). Also, FHA allows the buyer to receive gift funds, 100% of total closing funds if needed, thus, the buyer’s savings account does not need to be large, your $10,000 should be fine. To verify the accuracy of this information and for more information on closing cost assistance programs and loan pre-approvals, however, please consult a mortgage lender (each lender offers different mortgage programs, rates, fees, and qualification requirements). If you would like me to make mortgage lender recommendations, please contact me at 209-204-5494 or email jsalazar@c21mm.com. Thank you for the opportunity to answer your question.


Jose Salazar
Dre # 01446411
Century 21 M&M and Associates
0 votes
Steven Ornel…, Agent, Fremont, CA
Sat Sep 17, 2011

"Thank You all so much for your responses. I am still looking for lender/broker (not sure of the difference) I was told to go through wells fargo."

Wells will not provide a "true pre-approval". The link below explains why I prefer Mortgage Brokers/Bankers as both have multiple funding sources - an advantage you should seek.

"Banks vs. Brokers"

If you do not have a trusted referral, I would suggest you work with a Certified Mortgage Planning Specialist. Mortgage Broker/Bankers with this designation have been trained in financing, investment, and tax planning topics: http://www.cmpsinstitute.org/public/menu
0 votes
, ,
Sat Sep 17, 2011
It is not required that you use the CHDAP down payment assistance with a CalHFA 1st mortgage - but for the assistance programs you do need to use a CalHFA trained loan officer.

While nearly all lenders today offer FHA mortgages... not all lenders offer CalHFA mortgages (not to be confused with CHDAP down payment assistance, because like I said it is not required to be used in conjunction with a CalHFA 1st mortgage) as there is a special training process that lenders & loan officers need to go through.

Wells Fargo offers both to my knowledge, so they would be a good place to speak with. Just make sure your loan officer doesn't sound like a puppet (big bank loan officers are often known to be less than candid, but that doesn't mean you can't find an All-Star loan officer at Wells Fargo). You want to speak with more than 1 loan officer though, so be prepared to meet with at least 3. Mason-Mcduffie Mortgage Corporation, Prospect Mortgage, and Guild Mortgage also are CalHFA approved and are in your area. You can find the list of LO's at http://www.calhfa.ca.gov/homeownership/leads/plo.pdf or search the database of approved lenders at http://www.calhfa.ca.gov/apps/approvedlenders/
0 votes
Brenda408, Home Buyer, 95111
Sat Sep 17, 2011
Thank You all so much for your responses. I am still looking for lender/broker (not sure of the difference) I was told to go through wells fargo. I live in San Jose and would like to find someone I could contact in person instead of doing the process through email. If you have any recommendations please let me know. I read on the fha and calhfa sites that there are only a few places that are approved to work with these type of loans.

Ron... I dont have a particular area I am looking for. I do you have 3 small children so of course a safe area is a must. Any recommendations would be apperciated. Thank You
0 votes
, ,
Sat Sep 17, 2011
$120k sales price x 3.5% down payment = $4,200. Closing costs would be in the ballpark of about $5,000 (lender/title+escrow/impound account for taxes/insurance). Right there that is $9,200 already. FHA loans do not require you have reserves, so technically you could be flat broke after that, but I don't recommend that be the case. I recommend you have at least 6 times your proposed housing payment in reserves *after* you buy the home - that way you can be prepared for any housing/financial emergencies.

With CalHFA you can get down payment assistance with California Homebuyer's Downpayment Assistance Program (CHDAP) or School Facility Fee Down Payment Assistance Program (SFF).

CHDAP is assistance up to 3% of the sales price - provided that you make a $1k/1% contribution from your own funds. So if you use CHDAP you'd have to put a down payment from your own funds of just $1,200 instead of the $4,200 mentioned above. CHDAP would cover 3% of the 3.5% down payment requirement that FHA has - your $1,200 would cover the remaining .5% + go towards your closing costs.

SFF doesn't require any contribution from you, but it's for newly constructed homes only and additional requirements apply.

You can read both handbooks (which are designed for lenders, but they carry a lot of information that the homebuyer should also be aware of) at http://www.calhfa.ca.gov/homeownership/programs/index.htm

In either situation (using the CalHFA programs or regular FHA programs) you can ask the seller to contribute towards your closing costs, called a "seller credit", which would reduce (and can completely pay for) the closing costs for the purchase.

So if you used the CHDAP down payment assistance, and ask the seller to pay all of your closing costs, you could technically get in a home by only having to put down $1,200.

You mention USDA financing not being available because the population is over 20k, and while pretty much the entire city of Los Banos isn't eligible, there are a few parts on the very edge of town which are.

You can view a map of which areas are/aren't eligible at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do as well as you can punch in a specific address to determine if it's eligible.
0 votes
Steven Ornel…, Agent, Fremont, CA
Sat Sep 17, 2011

There's a right way and a wrong way to go about buying a home. You are asking some of the right questions. Many more need to be asked and answered. Your first step should be to sit down with a Mortgage Broker or Mortgage Banker to obtain a Pre-Approval (not a Pre-Qualification like the retail lenders provide).

If you do nothing else today, please review the following to understand what constitutes a true Pre-Approval and why it can save you from wasting about $1,000 on a cancelled transaction: http://www.Steven-Anthony.com/GettingStarted

If you are not sure where to obtain your Pre-Approval you can ask any of the Realtors® on this forum who they would recommend.

Here’s a few links regarding interest rates many have found useful:

Best, Steve
0 votes
Anna M Brocco, Agent, Williston Park, NY
Sat Sep 17, 2011
Visit with any loan officer, after reviewing your overall financial information, income, credit, debt, etc., a determination can be made regarding qualification, the type of loan, how much down, approximate closing costs, etc.; be aware that a mortgage pre-approval letter is required in order to determine your price range and for any offers to be taken seriously.
0 votes
Michelle Gal…, Agent, Los Banos, CA
Sat Sep 17, 2011
Hello Brenda,

If your going with FHA as stated you should be fine with that down. Typically your closing cost will run about 3.5% and your down payment is the same. Just be sure to have enough money left over to cover your inspections and Home Warrenty.

I am happy to answer any other questions you have.

Best regards,

Michelle Galli
Century 21 M & M
Web Reference:  http://m.mgalli@c21mm.com
0 votes
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