Are you putting off buying a home because you think you need to save up more money? Well you might not have to wait as long as you think! Fairway is proud to offer NCHFA Home Advantage loans with down payment assistance that you can use to buy a home in Charlotte! You can actually use this program to buy a home anywhere in North Carolina! There are no restrictions within the state, so unlike USDA or House Charlotte, you don’t have to bypass a home you love because it’s not in a certain neighborhood. There are some awesome benefits to this program, but there are some guidelines you should know about too. I will detail the most important points below.
First, let’s talk about the benefits of the program. You can use this program in conjuction with Conventional loans, FHA, VA or USDA loans. One of the primary benefits is the down payment assistance, so FHA loans are the most common since USDA and VA loans both offer 100% financing on their own. The down payment assistant is 3% of the total loan amount on government insured loans and 2% of the total loan amount on Conventional loans. This means you are very close to .50% down payment on the FHA loans and 1% down on the conventional loans. It doesn’t work out to be exactly .50% or 1% down because the down payment assistance is based on the total loan amount not the sales price.
The interest rates for the program are published on the NCHFA website everyday except weekends and holidays. The rates do change daily but in my experience they do move around as much as traditional mortgage rates. You can lock in the rate once you have a house under contract. The rates are different depending on program and whether you are using the down payment assistance or not.
The Conventional Home Advantage program is the newest addition. It offers 3 primary benefits. The first benefit is once again the down payment assistance. Getting a Conventional mortgage with less than 2% down payment is pretty spectacular! The other benefit is a base loan of 97%, while standard conventional loans require a maximum loan of 95% financing. So you can get a loan with only 3% down (without using the down payment assistance). The third benefit is less expensive PMI (private mortgage insurance). PMI is required on conventional loans above 80% of the sales price, and with this program it costs you less.
Before we get into the program requirements, I want to explain how the down payment assistance works. It is not free money, well… kind of. You receive the money as a 2nd mortgage, BUT there is no interest on down payment assistance. There is no required monthly payment, so basically it is free money. You are required to repay the money if you sell or refinance the loan within the first 15 years, but you only repay the amount you were given. I don’t know anywhere else you can get a few thousand dollars to buy a home for free!
The requirements for the program are pretty simple. You cannot earn more than $85,000 per year. That limit is for cumulative income for everyone on the loan, so if one borrower makes $45,000 and the other makes $41,000, you are over the limit. The good news is that the limit ONLY applies to people on the loan application, so if a couple makes $85,001 together you can apply for the loan with only one person and leave the lower earning person off the loan. You also have to meet the general requirements of the loan program you are applying for… (conventional, FHA, VA or USDA requirements). The loan must also receive an approval from FannieMae’s automated udnerwriting system (DU).
I hope this article has been helpful for you. I can’t possibly cover every scenario here, so if you would like to learn more you can call me directly at 980-721-7478. We also offer a free pre-approval service for this and other great mortgages!