Other Loan Programs

Understanding the 1% Down Payment Loan Program

Traditionally, conventional mortgages require a down payment ranging from 5% to 20% of the property's purchase price. Such substantial amounts can be daunting, especially for first-time homebuyers or those without significant savings. Finance USA's 1% Down Payment Loan Program offers a compelling alternative. Eligible clients are required to contribute just 1% of the purchase price as a down payment, while an additional 2% is provided as a grant, culminating in a total down payment of 3%. This structure ensures that clients reap all the benefits associated with a 3% down payment without the burden of private mortgage insurance (PMI).

 

Key Features and Benefits

Minimal Initial Investment: By reducing the down payment requirement to 1%, the program allows clients to conserve their savings for other essential expenses, such as moving costs or home improvements.

Forgivable Grant: The additional 2% provided by Finance USA comes in the form of a forgivable grant. This means that eligible clients are not obligated to repay this amount, effectively reducing the overall cost of purchasing the home.

No Private Mortgage Insurance (PMI): One of the standout features of this program is the elimination of PMI. Typically, lenders require PMI when borrowers make a down payment of less than 20%. By waiving this requirement, Finance USA reduces the monthly financial obligations of the homeowner.

Accessibility for Low- to Moderate-Income Clients: The program is tailored to assist low- to moderate-income individuals who might be apprehensive about their ability to afford a substantial down payment. By lowering this barrier, Finance USA promotes broader access to homeownership.

Eligibility Criteria

To benefit from the 1% Down Payment Loan Program, applicants must meet specific qualifications:

Income Limitations: Applicants must have an income that is less than or equal to 80% of the area median income for the property in question.

Credit Score Requirements: A minimum FICO® score of 620 is necessary to qualify for the program.

Down Payment: Prospective homeowners are required to provide a minimum down payment of 1% of the property's purchase price.

Loan Amount Restrictions: The program caters to properties with a maximum loan amount of $350,000.

Property Specifications: Eligible properties must be single-unit, primary residences

 

Comparative Perspective

Several financial institutions have recognized the challenges associated with hefty down payments and have introduced similar programs:

JVM Lending: Their 1% Down Payment Loan allows eligible borrowers to contribute just 1% of the purchase price, supplemented by a 2% forgivable grant. This program is accessible to all buyers, not just first-time homeowners, and requires a minimum credit score of 620. Additionally, it offers reduced mortgage insurance premiums, further alleviating monthly expenses.

Guild Mortgage: Through their 1% Down program, borrowers can initiate their homebuying journey with a 1% down payment, complemented by a 2% down payment assistance grant from Guild. This structure effectively provides a 3% down payment, easing the financial entry into homeownership.

Construction loans are used to finance the construction of a new structure. Whether you’re interested in building a brand new home for you and your family or you’re looking to construct a commercial property we can help craft a terrific lending solution. Each loan is as unique as the property you’re looking to construct.

We look forward to your questions about construction loans. Please call us to find out more.

Home equity loans call for the borrower to acquire a new loan on an already mortgaged property using the equity you’ve built as collateral. Home equity loans are typically reserved for those looking to pay down medical or consumer debt, start a business or pay tuition. Please contact us directly if you’re interested in a home equity loan. Most states restrict the amount of money one can borrow against their home. Interest rates on home equity loans are generally higher than conventional loans.

A popular loan type, conventional fixed rate loans feature a constant interest rate for the life of the life. Generally speaking, monthly payments remain constant. Traditionally borrowers are expected to provide a 20 percent down payment though this is not necessarily required. Contact us for details on down payment requirements. Available terms generally range from 10 years, 15 years, 30 years and 40 years.

Adjustable rate mortgages are loans where the interest rate is recalculated on a yearly basis depending on market values. As interest rates are adjusted so is the borrower’s monthly payment. While interest rates on ARM loans are generally lower than fixed rate loans they can eventually become higher. Various types of ARM loans include Hybrid ARMs such as 10/1 year, 7/1 year, 5/1 year and 3/1 year programs. Contact us for more information on adjustable rate mortgage loans.

A jumbo loan, or non-conforming loan, usually means any home loan for amounts higher than $417,000. Jumbo loans feature similar loan programs to fixed rate and adjustable rate programs. There are even FHA jumbo loans. The main difference between jumbo loans and conforming loans is the interest rate. Because jumbo loans are riskier for lenders they usually have higher rates. Learn more about jumbo loans by contacting us today.

Homeowners looking to decrease their interest rate may consider refinancing. A refinance calls for the homeowner to obtain another mortgage loan. Those funds are then used to pay off the original mortgage loan and the homeowner is then bound by the terms of the new mortgage. Depending on your situation a refinance loan could be a great option. Along with decreasing your interest rate, refinance loans can also help you switch from an ARM to a FRM, and in some cases reduce your loan term.

FHA loans are private loans insured by the federal government. These loans are popular with borrowers who don’t have enough funds to pay a traditional 20 percent down payment because they only require 3 percent down to qualify. Those who choose these loans are required to pay mortgage insurance which slightly increases their monthly payments. Lenders who wish to offer these loans must be approved by the Department of Housing and Urban Development. Please contact us today to find out if a FHA loan is right for you.

Reverse mortgage loans, also known as reverse equity loans, are only available to homeowners 65 or older. Like its name indicates, this program pays the homeowner either a one-time large payout or monthly installment. Once the loan term expires the house either becomes the property of the lender or the house can be sold to repay the debt. Reverse mortgage loans are great options for seniors looking to increase their monthly incomes. Contact us for more details.

Like a FHA loan, VA loans are private loans insured by the federal government. VA loans are only available to qualified military veterans and their families. These loans are only available to these individuals for their own primary residences and cannot exceed a $417,000 loan limit. For information on qualifying for this loan program please give us a call today.