Down Payment Information

We can help you find an house, condo or other property with an affordable down payment anywhere in Southern California, including Mission Viejo, San Clemente, Laguna Beach, Rancho Santa Margarita, Lake Forest, Laguna Hills, Irvine, and much more through our Multiple Listing Service (MLS).

There have been many changes over  the past couple of years in the lending industry. The old stated income/stated asset loans are gone. No longer can you sign your name and promise to make the payment and get a loan. But do you have to have 20% down? No!

****1/16/2009 Alert****

Down payment assistance (DPA) programs may be back! Before the Housing and Economic Recovery Act of 2008 was passed, there existed a little known way of financing the down payment for FHA loans. Gifts were allowed to the buyer by family or charities, which included churches. The Nehemiah Foundation was a charity which provided a structure where the seller can donate to Nehemiah and then Nehemiah would gift the money to the buyer. This worked in much the same way as seller paid closing costs, the buyer might simply offer a little more to the seller to compensate, effectively financing the down payment.

It's important to remember that FHA loans are fully documented and NOT sub-prime.

There has been a great deal of pressure to reistate the DPA option for FHA loans and now HR 600 was introduced today to do just that. The Nehemiah Foundation has a website which explains what the program is and how to support the new bill. Please visit their website and add your support. This is a benefit to buyers and sellers because it moves the market. http://www.nehemiahcorp.org/

One of the positive changes to come from the mortgage meltdown is the new rules for FHA loans. The FHA has raised it's loan limits based on the market conditions in the local area. In Southern California many cities have limits has high as $625,500.  These loans only require a 3.5% down payment and this can come from a gift. Closing costs can be rolled into the loan amount.

These loan are for all borrowers, but for first time buyers, there is also a refundable $7500 tax credit to help. To qualify your Modified Adjusted Gross Income must be under $75,000 for single buyers and $150,000 for couples.

Does this still seem like a lot of money? Let's talk about how you can find the 3.5% in the following example:

You have found a nice single family home for $450,000. Using the FHA loan you need $15,750 for the down payment. The seller will pay closing costs. The down payment can come from many sources.

Do you have any savings? Do you have a 401K? If you are renting, how much do you have for the security deposit? Do you have a relative who can gift you some money?

Did you know that rent is paid in advance but mortgage is paid in arrears? What does that mean? Let's say you are buying a house and will close escrow on March 31st. You will have paid rent on March 1st, but your first mortgage payment won't be due until May 1st. That is one month with no housing payment, that can save you several thousand dollars too.

Great Western Realty Group has experienced advisers who can help you sort through your situation and find the money for your down payment. Home ownership is a valuable asset and prices have never been more attractive. Contact us today to talk about your options.