How to Buy a Home with a Zero Down Mortgage
Many people today would love to purchase a Home in this incredible Buyers Market but they think they need tens of thousands of dollars for a down payment. This is simply not true. A littel known government program allows any buyer to own their dream home with absolutely Zero Down Payment.
The following will walk you through how to buy a home with no money down and no money out of pocket using a government program (FHA) and a DPA.
Your first step is to get in contact with an Mortgage Planner that specializes in FHA and works with a DPA. DPA is short for down payment assistance program. One of the longest running and most used DPA’s is the Nehemiah program. Nehemiah has assisted over 275,000 buyers and sellers since 1998. They are government approved and HUD compliant.
Get pre-approved for a DPA with a certified specialist. Credit need not be perfect to qualify. In fact, a score as low as 550 is acceptable for some FHA financing. The most important aspect of qualifying for the program is income verification. This program is for any buyer (first time or otherwise) of an owner occupied residence.
Begin your home search. FHA limits have been raised to as much as $729,000 in some areas such as Los Angeles county. However, most areas go up as high as $423,000. For many areas $423,000 buys much more than a starter home in todays market which makes home shopping a snap.
Now your realtor must begin the negotiations with the seller. The sellers assistance is vital. They must participate in the DPA by funding the closing costs to you and down payment to Nehemiah (or whatever DPA you choose). The seller will be required to contribute 7-10% to you through Nehemiah and closing costs. Expect to offer closer to the list price of the property since you are requesting a large contribution. The seller is generally concerned with how much they are walking away with so the contribution is not important to them.
Meet with your certified DPA specialist to make your mortgage application. It is imperative that you choose an experienced professional who is familiar with the workings of Nehemiah (or whatever DPA you choose) and FHA. Working with an inexperienced “Broker” will cost you. You could lose time, money or even the home that you’ve chosen.
The items that you will be required to have on hand are as follows. You will have to provide your last 2 years of W-2’s or your tax returns if you are self-employed. Have available your most recent pay stub and the last 3 months of bank statements. If you are currently a tenant renting a property you will also need your last 12 months of cancelled checks or a verification from the property management company.
Last but not least is your closing. Many people worry and sweat over this part but if everyone has done their job then it is smooth and seamless. By now all your questions have been answered and there should be no surprises. You know what you rate is, what the term is and how much money is required - ZERO! It’s such a pleasure to see new homeowners walk away from closing with a low 6.0% fixed rate and their new home - wow! You can do it - don’t let this opportunity pass you by.
