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Loan Programs Available (Depending on Location)

Get into a home with little to no money down: 0% - 3.5% Down

New Construction

* New Homes are a great option for 1st Time Buyers for many reasons.

* Nobody has lived in / messed up the home before - you're the first!

* Warranties are often included with the purchase of the home

*You can get a lower interest rate & closing costs covered by the builder - saving you thousands of dollars upfront

USDA

* New Homes are a great option for 1st Time Buyers for many reasons.

* Nobody has lived in / messed up the home before - you're the first!

* Warranties are often included with the purchase of the home

*You can get a lower interest rate & closing costs covered by the builder - saving you thousands of dollars upfront

VA

* New Homes are a great option for 1st Time Buyers for many reasons.

* Nobody has lived in / messed up the home before - you're the first!

* Warranties are often included with the purchase of the home

*You can get a lower interest rate & closing costs covered by the builder - saving you thousands of dollars upfront

DPA

* DPA - Down Payment Assistance Loan is a great way to get into a home with little to no money down

* Location-Based 0% Down & 1% Down Programs exist

* These loans typically have a higher Interest Rate so the lender can make their money back that way

*Criteria: Most Lenders will want a minimum 620 Credit Score

FHA

* FHA - Federal Housing Administration Loan is a 3.5% Down Loan

* Great for 1st time buyers because unlike other types of loans - this is not location based

* With FHA you can also ask for up to 6% Seller Concessions (saving you thousands upfront)

*Criteria: Most Lenders will want a minimum 580 Credit Score. Note - if Credit Score is below 580 you can still use FHA but will need 10% Down

Intermediate Level Loan Options: 5% - 20% Down

Conventional

* Note 3% Down Conventional Does Exist for 1st Time Home Buyers, if not a 1st Time Buyer - Minimum Down is 5%

* Less-restrictive style of Loan - not a Government Backed Loan, meaning less regulations, smoother contract to close process & faster closing times.

* If you do 20% Down - you also eliminate Private Mortgage Insurance(PMI) which will save you thousands of dollars. If you do less than 20% Down - PMI will fall off your Monthly Bill when you reach 22% Equity based on Original Home Price.

*Credit: Most Lenders will want a minimum 620 Credit Score

HELOC

* HELOC or Home Equity Line Of Credit is for buyers that already own a Primary Residence & have Equity built up.

* Let's say you purchased a home in 2019 for 350K. You recently had an appraisal done and your home is now worth 450K - BOOM! You have equity (yes it's more complex than that, but let's keep it simple)

* You can pull that Equity as a Line of Credit and use it however you'd like. Downside is - typically the interest rates for these are higher - like 1.5%~ higher.

*Example - remember that 100K you had? We can use that to buy 1 or more other homes as our down-payment which will have 1.5%~ Higher Rate (can be interest only for 10 years though) & you would have a 2nd mortgage at Market Interest Rate for the rest of the home.

Assumable

* Assumable Loans are unique - you are taking over someone else's loan & putting it in your name

* Why would you do that? - Most of the time because the loan you're taking over has a lower Interest Rate than the current Market Rate & you're taking over the loan at whatever year it's in (not a new 30 year loan, but if the loan is on year 25 - you're taking it over at year 25)

* The catch is you have to pay the difference. Example - the home you want to buy is selling for 450K & the current Loan Balance is 400K. You would need to pay that 50K difference to give the seller their equity

*Yes you can Assume any style of loan - VA, FHA, Conventional - IF the lender allows. The lender, or whoever owns that loan has to approve this & this process typically takes longer - like 60-90 days.

Advanced / Investment Style Loan Options

1031 Exchange

* 1031 Exchange is a way to not pay taxes on the sale of a property. It's not a Loan, but rather a way you can use funds for a Down Payment when you buy another property.

* Example - Let's say you just sold your first home for 400K and after paying your debt off, the closing fee's etc you walk away with 80K - not bad! Instead of paying taxes on that 80K - you can roll that into a 1031 and use the funds as a down-payment for another property.

* The catch is you need to buy a 'similar' kind of property and the property you buy needs to be more expensive than the one you sold. If you sell your primary home - you can buy a more expensive primary home. If you sell an investment property - you can buy a more expensive investment property.

*Pro-Tip - speak with your CPA and or a Real Estate Attorney /1031 Company before you plan to do this to make sure you have everything structured correctly.

DSCR

* DSCR or Debt Service Coverage Ratio is an Investment Style Loan that does not utilize your personal income as qualification - but rather the amount the property you're buying rents for.

* Usually for this to work you'll need 20% down & a Loan Officer can calculate the PITI payment. The property will need to rent for that amount or more in order to qualify.

* The Loan Officer will have an appraisal done to look at other homes that have rented in the area that are similar in order to justify what your property would need to rent for.

*Typically, these loans have higher interest rates because most Lenders will deem them 'more risky' - however as always, interest rate can always be bought down to make the deal work.

Seller Finance

* Seller Finance is unique in the fact that a traditional mortgage company is not involved. How it works is a Seller will become the lender & the Buyer will pay the Seller monthly PITI payments at an agreed on Interest Rate.

* It is recommended that the payments are managed by & held in an escrow account by a note-servicing company for a small fee. If Buyer does not make payments on-time the Seller (who became the lender) has remedies to foreclose the Buyer & take back the property.

* Pro's: Lower expenses associated with Closing Costs, more flexible terms, more accessible loan.

*Con's: Seller's typically require 10-20% down & have higher interest rates than traditional loans, but not always.

Documents You Will Need To Qualify For Your Loan

W2 - Employee

Government Issued ID's
Past 2 years of W2's & Tax Returns
Pay Stubs to verify income / show reserves
Debt Balances including any current home mortgage, student loan, car, personal loan, and credit cards
- Documents proving Debt Balances / Payments
If you're receiving Gift Funds - you will need to provide a Gift Letter
Divorce Decree & Supporting Alimony Documents if applicable
Promotion Letter / Overtime Verification Letter from Employer
Relocation Letter from Employer if applicable

1099 - Self Employed

Government Issued ID's
Past 2 years of 1099's & Tax Returns
Bank Statements to verify income / show reserves
P&L may be used to show income /expenses for business
If you file taxes as an S-Corp you will need to provide your K1 as well
Debt Balances including any current home mortgage, student loan, car, personal loan, and credit cards
- Documents proving Debt Balances / Payments
Divorce Decree & Supporting Alimony Documents if applicable