FHA - NHF grant loan

[Anonymous]

Trying to buy a house in Massachusetts.

Lender got back to me with:

FHA 3.5% down due to lack of downpayment.

NHF Platinum Grant at 5%.

4.375% rate

$250,000 loan

Trans Union score 802

Equifax 771

Esperian 768

I make decent money so making the payments is no issue (currently rent a condo) but was in shock after seeing that the NHF Grant raises the rate by .5. 

Anyone else do FHA with NHF grant?

Not many lenders I have contacted deal with the NHF Grant. 

What do you think? 4.375% good? for this type of loan? 

With FHA you get 5% from the NHF for down payment/closing costs. 

[StartingOver10]

From what I have seen from other first time home buyer programs where a grant is involved, the interest rate is higher and so are the closing costs.

This does not mean all programs are that way and I don't know your specific housing program (NHF).

The best way to compare is to get a loan estimate from another lender without using the program. They can give you the figures without pulling your credit. Then if the grant is worth it to you and you qualify for it, go for it. If it isn't worth it (costs too much monthly and at closing), then don't use the grant. If you don't have the funds to purchase without the grant, then naturally you need to decide if buying now is worth the extra expense to you. 

Usually you want to get your quote from a lender that is not handling the grant program so you can compare the two or more financing offers.  

[Anonymous]

Platinum is very popular (in CA it's under GSFA), and one of my favorite DAPs. Here in CA, the program charges you an additional 1.5% "origination charge", so the 5% is actually only 3.5%.

Other than that, closing costs should be almost the same as a non-grant loan. With your scores, you may want to actually look into a 97% conventional Platinum if they allow it in MA. Here in CA, using the Platinum grant with a conventional loan allows you to use lower levels of PMI coverage than a non-Platinum conventional loan. That will also give you an extra 0.5% (5% grant - 1.5% origination -3% downpayment = 0.5% grant remaining) to use towards closing costs. Higher rate than FHA, but cheaper mortgage insurance. Just something to explore if it's an option.

[Anonymous]

thanks... looking into Conventional 97 now