Tag Archive for down payment

Home Advantage Down Payment Assistance

How much Down Payment Assistance can I get with Home Advantage?  This depends on the price of the home and lending guidelines.  Home Advantage provides down payment assistance up to 4% of your loan amount.  So if your loan amount was $200,000, you would potentially be eligible for $8,000 in down payment assistance!

Do I have to pay the Down Payment Assistance back?  The money would have to be paid back eventually, but there is NO monthly payment and ZERO interest!  You would repay the down payment assistance when you either sell the home, rent it out, or pay off your 30 year mortgage.A or B?

What loan programs can be used with Home Advantage?  Almost any loan program can be paired with this down payment assistance program, including Conventional, FHA, USDA, and even VA loans.

Is Home Advantage any different than other Down Payment Assistance programs?  Yes.  The rates are much better than other programs that have been offered by Washington State in the past.  Also, for this down payment assistance program you DO NOT have to be a first time home buyer AND it can be paired with the MCC program!  This is unprecedented as in the past most programs have only been available to first time home buyers and could not be paired with the MCC.

Is Home Advantage right for everyone?  Everybody’s personal situation is different.  To find out more about Home Advantage guidelines, as well as other down payment assistance programs offered in Washington State, go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops.  Don’t make the biggest decision of your life without getting educated!


FHA vs. Conventional Financing

Whether you are a First Time Homebuyer or have previously owned a home, an FHA loan may be the right choice to buy your single family residence, condominium or townhouse. FHA is a government backed program and stands for Federal Housing Administration. FHA offers great interest rates on 30 year fixed rate loans and Adjustable Rate Mortgages making owning a home much more affordable than many people might think. FHA allows buyers to secure great financing by charging borrowers an Up Front Mortgage Insurance Premium of 1% of the loan amount (which is tacked onto your loan balance and paid off over 30 years). There is also an annual Mortgage Insurance Premium which is broken down and paid on a monthly basis. That premium starts at 1.15% of the loan amount annually (and decreases as the down-payment increases). The minimum down-payment is 3.5% of the purchase price for the home.

Now for how a conventional loan works… Conventional loans are not backed by the government. They are also a great fit for many buyers whether first time homebuyer or not, buying a single family residence, condominium or townhouse. Conventional lending offers great fixed and ARM programs just as FHA financing does. Conventional lending does not have the backing/insurance of the government against a potential default of the loan. Therefore if a person is putting a down-payment of less than 20%(no mortgage insurance necessary over 20% down with conventional), there will be a different type of Mortgage Insurance secured. These mortgage Insurance programs come with a much wider array of structures. With Conventional, there is no mandatory up-front Mortgage Insurance Premium. There is an annual Mortgage Insurance Premium broken down and paid monthly. There are also programs available where the lender will pay these premiums for you in exchange for a higher interest rate on the loan, or even programs where the buyer can pay the premiums up front in full or partially. The minimum down-payment for conventional lending is 3%. However at a 3% down-payment, securing mortgage insurance can prove to be difficult and expensive. A popular down-payment amount for conventional lending begins at 5% where the mortgage insurance is more easily attainable and less expensive.

Here are a few key points in determining whether FHA or Conventional is best for you… FHA financing is generally more lenient on credit ratings, income history and debt to income ratios. It is generally easier to navigate through the FHA underwriting process. If a borrower has a marginal credit rating, a relatively high debt to income ratio or an unstable work history an FHA loan will most likely be the best option for them over a conventional loan. On the positive side for conventional lending, if a borrower has a good credit rating, a stable employment history and a relatively low debt to income ratio there will often be some Mortgage Insurances choices for them that will be beneficial over the FHA’s Mortgage Insurance program.

While the above information gives you some idea of the differences, comparing FHA financing against Conventional financing is something that should be seriously considered on a case by case basis. There are many factors that need to be taken into consideration in determining which type of financing will best suit your needs/goals as a homebuyer. If you would like to learn more about financing options, please go to our Calendar page and reserve a spot in one of our FREE First Time Home Buyer seminars.