Great credit but almost nothing for a down payment. Question...

[Anonymous]

You do not have to have 5% to get an FHA loan.  3% will do the trick for you.  If you have the 3%, that's great - but you don't even necessarily need it.  Find the neighborhood where you want to live and get an idea of what 2,3, and even 4 bedroom homes in the area are selling for.  These are called COMP's (a good realtor should be able to provide this information to you).   With it being a "buyer's market" right now, you have much more negotiating power than what you would normally have.  Many houses are staying on the market now for 6-12 months, and sellers are becoming impatient.  Any decent offer, and a lot of sellers are likely to take it. 

NEGOTIATE! NEGOTIATE! NEGOTIATE!  Let's just say you are looking for a house in the $150K range.  Find the house you want, and offer them a little more for the home than they are asking for.  I know that sounds crazy.  But bare with me, here.  If it's listed at $150K, offer them $153,000, but you want the seller to contribute 3% towards the down payment ($4,590) and then another seller contribution of $4000 in closing costs.  In essence you are offering them the $153,000 minus the seller concession of $8590 ($4,590+$4,000).  Subtract the $8590 from the $153,000 and we have the seller receiving $144,410 and they were originally asking for $150K.  That should buy you the house, and your down payment and closing costs have already been covered.  May sound complicated, but trust me, it's really not.  Print this off and take it to your realtor; he or she will know exactly how to structure the contract to have these concessions in the offer.  With this, you will be able to come to closing with little or no money out of your own pocket, and you become a homeowner. 

Simple enough.  Let me know if I can help.

BigPapa7809

[scorepower]

that works. i will work with my realtor and give it a shot. i'm assuming you would be qualified for a certain amount up front? when you work with a loan broker, they uually ask you for your assets and downpayments, etc. is this something you tell them that you will have the downpayment but a certain amount will be paid by the seller? unfortunatly we don't qualify for FHA due to income limits.

[SanDiegoEngineer]

There are no income limits on FHA loans - only loan maximums, which vary by area affordability - is that what you're referring to?  In that case, you may want to watch the news over the next month - it is very likely that the FHA loan limits are going to rise drastically soon (there are bills being reconciled by the Senate and House currently that will both bump the FHA limits quite a bit, and a lot of political pressure right now to get it done soonish).

As a side note, the 3% down requirement from the FHA cannot be satisfied by a lender or seller concession (though they can contribute up to I believe 6% towards closing costs, loan rate buydowns, upgrades, etc).  The buyer must provide the 3% on their own (though certain types of gifts, for example, from family, are allowed).

Message Edited by SanDiegoEngineer on 01-31-2008 10:11 AM

[Anonymous]

Disagreeing with Big Papa - don't offer MORE to start.  Offer Example #2 and let them counter knowing what their original target net is (you will know if they are trying to bleed you).  BTW, I always run a seller net (based on their list price) - to get an idea of what 'they' think they should be getting and where the offer is at in comparison.  These are rough num bers and don't include adjusting for who paid taxes (and when) so it it far from an accurate net - but is is an 'idea' of their numbers.

Example 1:

Listing Price $150K

3% closing help already expected (here anyway)

Approx cost to sell: 11% here not including the buyer help

Net to seller: $129K ($21K total costs)

Example 2:

List Price: 150K

6% dp & CC help

Approx cost to sell 11%

Net to Seller: $124.5K  difference 4500

Example 3:

Offer Price: 154,500

6% down & CC help9276)

11% cost to sell: 16995

Net to seller:128,235 (difference from example 2  $3735 to their benefit). 

the $3735 difference is 2-3 months PITI - so if you are doing a 30 day or less close  that number matters even less than carying the property for another 2-3 months to get another offer.  How fast properties are moving also plays a role.  What their motivation is for selling is the biggest  factor.  And if I have to I will point it out to their Listing Agent.

[scorepower]

Thanks for all the info. 

I thought it was the income eligibility for FHA loan but i could be wrong.  We are definetly looking for a house in the 450K range.  We have 3% down but by June we will have the 5%.  Our DTI was at 53% but having the 5% down and FHA loan limit increase should help us out and put us within our price range.  My score is 692 and DW is 712.   

[Anonymous]

I know this may seem OT, but ...

Please think twice about doing 100% financing.  Many real estate markets are in a declining state.  If your house declines in value, you will be "upside down" which means you owe more than the house is worth.

JMHO. 

[Anonymous]

450K is over the FHA limit (excl. HI and ???) for now - this may change in February with the financial incentives going thru congress.

[ShanetheMortgageMan]

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Brooklyn wrote:

I want to apologize up front for this long winded question. Here is my situation:

I am very interested in purchasing a home. I am a first time home buyer. I have been thinking of picking up a foreclosure home in my area. Vacaville, CA. I make $70~K a year, have very little for a down payment, but excellent credit. I have been at my current job for 1½ years. I spoke with someone who does FHA loans and they said I make too much to get down payment assistance.

As of 1/18/08 (according to myfico.com, of course, ) my scores are:

TU: 771 EQ: 761 EX: 776

I want to pick up a 3bd/2ba 1400+~ sq ft house in the neighborhood of $170K if I can (including tax, insurance, and the horrible PMI.)

Is it possible to get a mortgage loan in excess of what the asking price of the house is? Say one is being sold for my magic number of $170K. Can I get a mortgage for 220K to pay off my long term loans student/car, etc?

If I absolutely had to I could muster $12K for a down payment.

Is my goal even reasonable?

Thanks!

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State/county/city sponsored down payment assistance does have those income limitations.  However down payment assistance companies like www.getdownpayment.com or www.ameridream.org do not have income limitations... but do require seller participation.  Basically they require the seller to pay them back the amount from their sale proceeds in the amount they give you as assistance.  I'd say hold onto your $12k, you don't want to be cash poor and house rich.  Can't get more than the sales price and use the difference to pay off your debts.  What are your monthly payments on the car, student loans & any credit cards?