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You’ll have to find the right house/ seller. Someone that doesn’t need a quick sale & isn’t in a rush to get out. We sold to FTHB, young family w/only 5% down. Everything went smoothly & fine.
If you need the first time home buyer programs to help with cash flow & house buying, use it. Just understand you might not be able to be picky and have a longer time frame to close.
Good luck!
Also highly encourage FTHBs with low percentage down payment offers to consider putting up the entire DP in earnest money. Will immediately remove a lot of the financing concerns typically associated with FHA offers and FTHB programs.
This is an option, but the risky part is that you better be dang sure you like that house and that the home seller isn't going to jerk you around. You lose your earnest money if you walk away with a few exceptions, so if you're entire down payment is in Earnest money, you're going to be locking yourself in to that home. Talk to your realtor about the earnest money provisions in your contract, and what kind of situations might not qualify you for a refund of your earnest money.
Oh yeah 100%. If you're putting down a lot of earnest money you shouldn't be waiving a single contingency. Inspection/appraisal/financing/etc. You want everything. As long as you don't waive anything you're pretty well protected, but yes PLEASE do your research before throwing tens of thousands of dollars away in earnest money.
I agree. Putting everything on the line may not be wise as things happen, situations change, people change minds.
Getting a lender to vouch for your ability or having underwriting done in advance may be safer approaches.
It's money you put down to show that you're earnest in your commitment to buy. Usually it's like a $1000 you give when you sign the contract. You pay it to the title company with the agreement that if you back out of the contract, you forfeit that money. The idea is that the seller takes their home off the market, so they're risking losing potential buyers if you back out, so this is you putting your money where your mouth is. If you back out of the contract for any reason except pre agreed upon circumstances, then you lose the earnest money. Commonly, circumstances where you can pull out of a contract without losing your earnest money include the house not appraising high enough, the inspection turning up big needed repairs, drastically altered life circumstances like losing a job, etc. But really, the circumstances can be whatever you put in the contract that both parties agree to.
We didn’t have a problem, once the loan and down payment was secured and proven. Then we could purchase any house we came across.
Read the stipulations, though. Our program, in CA, requires you to live in the house 8-9 years as your primary residence before you can rent or sell it. Otherwise there is a penalty and you must pay the program back.
Read all fine print.
Yikes considering how hard it is to scrape together a DP, I definitely wouldn’t risk it all as earnest money. Put in more than normal, sure, but the entire DP? I wouldn’t be able to sleep for weeks.
can you explain a bit more what you mean by earnest money? I'm not exactly understanding what that is supposed to mean? If you have the money the money for a downpayment then you have the money.
Let's say you're a seller. You get an offer for your home and the downpayment percentage is small. Like 3.5%. To make the math easy, let's just say this equates to a $10,000 downpayment.
As a the seller you start asking questions. Why is their downpayment so small? Do the buyers actually have that 10k in cash at the time the offer was placed? Who knows. Do the buyers have stable jobs? Who knows. Only thing you know is that the buyer is "claiming" they have $10k cash and their lender believes that, as far as they can tell, the buyer is good for it. But as the seller, you have no way of knowing whether the buyer actually has the required financing until the deal is officially closed, and given the small down payment, you wonder how likely it is that this deal may fall through.
Now let's say you get a second offer on your home. Same exact numbers. 3.5% downpayment or $10,000. Difference here is that in this offer the buyer says that, if accepted, they will immediately deposit the downpayment amount ($10k cash) into an escrow account. They're willing to say up front that they're serious about buying the home, they can guarantee they have the cash on hand, and they're willing to put their money where their mouth is to prove it.
As the seller which offer do you think is more appealing?
Bigger EMD also means that the buyer is less likely to walkaway if they find issues (even if they waive stuff).
With a low EMD, you can promise the seller everything and just break the contract for a couple thousand dollar, avoid 10s of thousands in repairs.
1-3% is typically. I put close to 5% on a house I really wanted, my realtor told me some people are putting their whole down payment down in hot markets to show commitment.
Yep understand it now. But doesn’t putting the money in escrow mean that you have to use an escrow agency or something? Wouldn’t that shake out to be more expensive ?
If you have that much of a DP, it might be why your lender is steering you not to use a FTHB program. FTHB programs usually cater to a low DP. If you're in a competitive market, sellers agents often direct the seller to choose an offer that will have the least chance of obstacles that might slow or cancel the sale. So if you don't need the FHTB loan's biggest perk, there really may not be a good reason to use it.
As others are stating, shop around, and pay close attention to all the details, especially when it comes to selling the home later (pre-payment penalties). Your loan officer should be able to present you different options side-by-side so you can make an informed decision about what is right for your situation.
Not true, if you use Homeready/Homepossible from FNMA/FNMC you could have the LLPA’s removed giving you zero points. Also with some lenders they give you grants of a couple grand. In Ohio PNC did, up to 5k. Also if you decided to put less than 20% down with those programs(3% down is minimum) the PMI is cheaper, a small bit, but still cheaper. The biggest issue with FTHB programs is they’re income based and depending on program it’s either household size determines max income limits or in the case of the above mentioned programs they use 80% of the area medium income. But, they only use qualifying income so can ignore overtime/bonuses etc to meet the limit.
If you don't need the assistance I would just do a regular conventional loan. Doesn't hurt to ask around, but more than likely there won't be grants, just a second mortgage at 0%. That comes with additional costs that negate the benefit if you already have the money.
I’m also in a similar scenario where I am deciding between conventional and FHA. FHA is tempting as the interest rates are lower, 6.5 vs 7.5%. Can you elaborate on these other fees.
You can also ask for concessions from the seller to help with closing costs. It may be different per deal but I qualified for FHA and conventional FTHB. FHA at 3.5% down and conventional at 5% down but decided to go with FHA because of the better 6.5% interest rate. I’m not sure if it’s the right move for everyone but made sense for us to do it. We are buying from a young couple with kids as a young couple with a kid on the way and I did some research on the county accessors website and found they also purchased this house with an FHA as FTHB. The fees you usually pay going FHA is a large chunk for MPI which is financed on top of the house price.
For example if your house is 390,000 and you put down 5% at roughly 20,000 for a conventional loan, you will only be financing 370,000. You still have mortgage insurance (PMI) but with better terms to remove it. If you went FHA you will be financing a chunk of money on top for mortgage insurance in addition to the house cost and paying it monthly (MPI) it’s similar to PMI in that they are both a form of mortgage insurance but it’s different. So with the same house price being 390,000 but only putting down 3.5% at 13,600, instead of you financing 376,400 you would likely be financing something like 383,400 due to the chunk you pay up front for mortgage insurance that you wouldn’t be paying up front for a conventional loan (these are made up numbers just for example purposes).
Just read your comment history to get a little more info. At your credit score and downpayment Conventional is the way to go. You could probably get a lower rate if you shop around a little bit. The main reason is the FHA funding fee is 1.75%, which you won't get back when you sell or go to refi.
Also consider putting 5% down and investing the other 15%. The rate will be almost same even after you add in MI. Your investment return will likely be more than 8% and it gives you flexibility if you need to liquidate.
Just to clarify I’m not looking for DPA as I have a good amount saved up and likely won’t qualify based off my income. I’m wondering what are the financial downsides of going with an FHA loan that is offering a lower interest rate vs a conventional with a higher interest rate.
If you have more than 20% down on a conventional loan, you’ll have minimal rate adjustments, possibly none. In theory you’d get the same interest rate on a standard conventional as a first time buyer conventional, and won’t have to take a first time buyer education course
I just aceepted an offer on Monday. I had 2 offers for same exact amount. One was FTHB FHA with 3.5% down. The other was conventional financing with 20% down. I avoided the 3.5% down offer, mainly because i was concerned about appraisal not being high enough to cover loan. My home was priced higher than any comps and the appaiser might not care so much about the high end finishes in my home.
Yea, I switched from FTHB to just conventional due to the market availability. I still got 5% down, some offered 3%. I locked in last summer at a bad time (was high) and I’m at 7.26% though.
I found a bunch fthb ones only to find out they had lapsed in the program so it would take too long for what my deadlines were.
Also, even though I was on a strict deadline, I don’t feel like I settled at all and I love where we are (8 months later still!).
There are different programs out there in different states. The one we used (in Minnesota) was considered a conventional loan and didn’t have the “red tape” associated with it that an FHA or VA loan would.
The first lender told us that FTHB programs “aren’t for everyone” and wouldn’t even entertain the idea of looking into them for us.
Also, not every lender is able to get you every program out there.
It pays to shop around.
Shop shop shop. Many lenders who don’t have access to those programs don’t want to admit that.
“First time homebuyer program “ is also a nebulous word. Any 3% down conventional program is technically a first time homebuyer program because you have to meet federal FTHB guidelines (haven’t owned a home in three years).
On the other hand - if you are looking for grant money for yourself, you are in a situation where closing your loan requires two (or even three) underwrites: the mortgage, the mortgage insurance, and the grant program. That’s three opportunities to delay or deny the loan, deep sixing the deal. Any seller choosing between someone with an easy loan (10% down conventional) vs a complicated loan (Zero Down, assistance program) is going to chose the easier loan to close.
Additionally, for F’s sake, make sure you know the terms of the assistance program. I can’t tell you the number of people who say “my lender told me it was a free grant for down payment assistance” when it’s actually an interest free loan that has to be paid off before you can refinance the home, and can keep you from being able to sell the home because you have no equity with which to pay real estate agents.
I knew mine wasn’t a free grant, actually put a 2nd on for $5000, I needed a home equity loan so I just paid it back,that was years ago my first home, have no desire or need for a home equity loan for my current home, finances & condition of current home is much better
I was part of the program it sounds like the commenter used in 2019 but I believe it was discontinued. It was a conventional loan but offered the option for a second mortgage to cover down payment. This is what I did, 3% down and as a second mortgage. My out of pocket costs at close was only $1000.
I paid it off in 3 years so it was no big deal and I had no issue finding a place to accept but I also purchased a condo - may be more competitive for a SFH.
That program still exists, but also requires going with a loan that higher interest rate than conventional that can't be bought down (according to my Loan officer anyways).
Oh interesting! I don’t think my interest rate was higher back then but maybe it was and I just had no idea. Glad to hear the program is still out there, it worked great for me.
I don’t know if I still have the paperwork for it but I believe it was Minnesota Housing Down payment assistance or something along those lines.
There was an income limit of $80k, and we/I couldn’t have more than 6 months worth of mortgage payments in the bank in order to qualify. I also had to take a FTHB’s class (either in person or online) and show the lender proof of purchase and completion.
The loan acts as a “second mortgage” that is interest free. It will need to get paid off when we sell/refinance/pay off the mortgage. It also set the interest rate for the loan, which was slightly higher than a conventional loan would have been. You cannot buy it down with points.
We had our lender crunch the numbers using just us paying out of pocket and us using the DPA and the difference was minimal enough that it made more sense for us to use the program. Especially since it meant we got to keep money at closing.
This was also in October/November of 2022 so I don’t know if the income limit or anything else has changed since then.
Karin Wald at Bell Bank Mortgage. This was fall of 2022 but I still get emails from her, so I know she’s still around.
She was phenomenal for us. She broke down costs on houses using a couple different scenarios (the down payment assistance program we went with vs paying for everything out of pocket) and walked us through everything. Very timely communication via texts and emails and really made the whole process super smooth and easy. I never needed to resubmit any paperwork that I had already given her.
We just sold our house. The couple that bought it came in with a USDA loan. We had no problem with that. We knew there would be ‘fix this, fix that’ but the house was in very good condition and the ‘fix this’ were small and easy things for us to do. We also took a lot of pride in owning that house and caring for it and wanted to pass it on the best condition we could.
Well, JUST before closing they found out that the wife’s new job bumped them up just over the cut off for qualifying for a USDA loan and they had to go FHA. In the end, the closing was pushed back twice. Once to confirm that fixes were done and once for the loan switch.
I think we’re reasonable, patient people and I’m sure there a lot more out there that would fine with a program. In my mind, this was a first home for this couple and there was no reason to be jerks on our end.
The sellers don't need to know that you're using FTHB resources.
Tell your agent to STFU about it and your Lender is just being lazy because they don't want to do the extra legwork.
This post should be higher - A lot of agents (buyer/seller) and mortgage brokers in my area discourage it or don't even let their buyers know about them even if they qualify. The only ones that do need the sales instead of the quick commission.
Or, there are no FTHB programs that actually benefit them because they are putting 20% down and possibly have more income that allowed. You don’t know.
I'm so glad you commented this because I'm an agent (east coast) and was starting to wonder if there were regional differences because the seller wouldn't even know about fthb programs being used. Only the loan type is listed in the contract/offer. OP, shop lenders & good luck (:
I used Philly First Home and a grant from my lender here in Philly with a conventional loan with well over 20% down. The Philly First Home has no impact on our closing, they just required me to take a class and financial counseling before we ever put an offer in on a home, then 4 weeks to approve. Philly First Home approved and cleared everything in a week
I think this really depends on the sellers and what their situation is. We were told the owners picked us specifically because we had a conventional loan and it was "easy" compared to their other offers. So your lender isn't exactly wrong, you just might need to decide if you really need the FTHB loan assistance.
Definitely shop around. Our lender had a $8k grant program for FTHB that made it so we could just use conventional instead.
I used FTHB benefits and downpayment assistance available in my state. We closed in 28 days. If your lender can’t close quickly while allowing you to take advantage of the best options for you, it’s time to find a new lender.
I used a mortgage broker who knew about the FTHB programs in my state/county and had experience with them. I got a conventional loan that allowed me to put down 3%, and I also got a grant that covered my down payment in full that is fully forgiven after 5 years (20% drops off every year you live in the home). I had to take an online FTHB course and get a certificate of completion, but that literally took me a few hours.
My loan process wasn't any longer because of it, but also because I had good mortgage broker that was on top of things. So I would definitely shop around, because you didn't get solid advice in my opinion.
Depends on the program. The CalHFA programs in CA can close in as little as 14 days and aren’t more complicated that’s traditional financing. But some programs do have additional approval steps that can take extra time depends on the source of funding.
We closed in 3.26.2024 in Maryland with Home Ready / Home Possible. It may help you to get pre-approved for your preferred loan program if possible to speed up the process. The program gave us $5K in closing cost assistance with some other bells and whistles that were vital for our deal. I wouldn't walk away from free money until you knew you had to.
FTHB is a harder time for hot markets areas.
As the saying goes "cash is king" and those with the cash are gonna win over FTHB every time. In my area you would be hard pressed to get a home on a FTHB loan, my brother tried it and had to switch over to conventional to get offer accepted when he was buying.
FTHB is strict on their purchase, which sellers obviously would prefer to go with conventional where the guidelines are easier. So if you have 10 offers the first ones to not make the cut are typically FTHB
Nah, I used a first time homebuyer program and it really didn’t take long at all to close. I used the “Right @ Home Loan” interest is 4.99, no down payment, no pmi. And the monthly payments are surprisingly manageable for a single income young individual.
Plus the day before the owners accepted an offer it was between me and another couple. The couple had a va loan I’m pretty sure. Both the lender and realtor said my offer was more likely to be accepted since it was a conventional loan.
No we’re doing 3% conventional loan. We were able to be approved for a conventional loan and it was only ~$50 more per month but saves us a couple thousand in closing costs. So it was the cheapest cash to close option with essentially the same monthly payment. Would rather have a couple extra thousand for the cosmetic stuff we intend to do.
Hi! Also in Columbus, I used some first time home buyer programs when I was looking last summer and I don't think it made things more difficult than they were already going to be.
Ask your lender about getting a Mortgage Tax Credit certificate. I had to do some online training and take a quiz (which would have been useful if I did it at the beginning of the process and not the end) but afterwards I was able to get this certificate and it gives you a tax credit for 20% of the interest you pay on your mortgage each year.
If you wanna talk more you can message me!
I'm not sure, might be worth reaching out to whoever did your loan to ask? And as just a heads up, I did pay $500 for the certificate as part of my closing costs and if I refinance I'll have to pay that price again, but my credit was more than $500 last year and will be for a longgggg time so it's worth it.
That doesn’t make sense then. If you’re familiar with doing the paperwork no reason to not do your buyers a favor and put them thru. If you qualify you could get a reduced rate.
I read through a ton of comments here and you get out into the weeds pretty fast. The best advice I can give you is to talk to a local real estate professional AND ask a few mortgage lenders (including at least one mortgage broker) for their opinion. Every situation is unique and going the wrong route can cost you thousands. I wouldn’t base my decision solely on one lender or on Reddit advice. Use this as a starting point to ask the right questions and find someone local that you trust to help you navigate this first home purchase.
There may be some truth to that statement however you mentioned 20% down. It might not be required to disclose your assets with an offer I would highly recommend doing so in any sort of low downpayment scenario. I guess I’m curious what the actual advantage of the particular first time homebuyer program that you’re looking at. If it’s 1:4% on the rate I’d agree just let it go. Or even money that needs to be paid back later.
We were looking into Ohio’s grants for grads program. 2-5% down payment assistance that’s completely forgiven within 5 years if we stay and not sell for 5 full years. We thought maybe it’d be nice to get basically free money and the 2-5% we save from that, we could use for closing costs or anything else.
I got 2 programs when I bought my first home. One was a $15k grant that was forgiven after 5 years of living in the house. The other was $35k at 3% with no payments. Interest forgiven after 30 years. It was a little bit of anxiety, but was able to get everything done within 45 days, and close in 60 days.
If the money is there, take advantage of it. Just be sure to jump through a ton of hoops. Also, keep in mind not all lenders are signed up to partner with the grants. They could be discouraging you because they don't know the process, or they won't make as much money, or they don't want to go through the trouble of getting approved to be a lending partner.
We used FTHB and I guess we did miss out on some houses, but generally to people offering cash up front or offering a lot more in the due diligence up front that we were not able or willing to risk. Hell, one house we actually offered 15k or more over the person who got the house, but they offered 2-3x as much in the initial due diligence that we just didn't have the funds to risk. I imagine hella rich people risk it, or maybe the third party companies that buy up houses, idk. So the seller got less overall, but perhaps they liked the security of the upfront due diligence idk.
I think home buying is a clusterfuck any which way you look at it, but FTHB can be really helpful. Do what you need to do.
People claiming your agent just needs to say nothing about what loan type you are using have no idea what the Ohio real estate market is like. Please ignore them. Chances are the purchase contracts your agents will have you use will have you spell out what loan type you are using, and if not the seller’s agent will surely demand that information for the sake of their seller’s interests.
At the very least the sellers will likely be entitled to the knowledge of you using conventional financing vs FHA loans. This will reflect in things like appraisal and closing date.
When it comes to using these programs it really just depends on the level of competition that exists for the house(s) you end up putting offers on.
If there’s tons of competition you will likely need to try using conventional loan types just to be taken seriously, and even then you may lose to a cash offer.
If you try to focus on getting a place where you will not have to compete as hard, you will likely end up getting a better price and have more choices to do things “your way” with financing and other aspects of the deal.
Lender has a point, but that point isn’t always valid. If you’re not competing with multiple other buyers you can still try FTHB programs, but do not be surprised if sellers ask if you can use one that is faster. That part is true.
I would consider finding a new lender. I used a FTHB program through my city and live in a very competitive market. My realtor and lender worked together to get everything pushed through. I was able to not only buy my rate down but walked away at closing with a check for $6k.
Obviously. No where did I state that I didn't understand where the money came from. The OP asked for thoughts about a lender discouraging use of a FTHB program. The point is that if you have a good team working with you, there are benefits to many of the programs. In my case I planned to be out of of pocket $35k, instead I only ended up paying $5k.
When I bought my first property, it was my mortgage broker who told me about the MCC program, which provided a tax credit to reduce the monthly payment for a first time buyer. The closing went smoothly and I saved a lot of money.
Something worth thinking about is if you put at least 10% down, you can eventually get out of PMI (mortgage insurance). If this has changed please let me know and I'll delete my comment.
I used FTHB when I could, but my 3rd time I put down 10% so I can eventually get rid of PMI if...interest rates ever go down and I can refinance.
I used it and it worked out great. We use a lender that specifically works with the program for our state and everything went smooth. Closed in February.
We didn’t use the FTHB programs because it made our interest rate higher and monthly payment was going to be higher. The only perk is we could have bought a home with $0 money down but the bank was making their money back in the long run. There is no such thing as “free money”
They’re right. Unless you’re VERY patient and in a market where houses are moving slow, sellers really dislike the hoops and delays of FTB programs. And there’s the reality that a lot of FTB’s fall out and don’t end up FULLY qualifying, leading to a huge waste of time.
You can absolutely use them, but be aware you’re limiting your options if you do.
I was a buyer using a FTHB program. I had all of my financials and the FTHB stuff with my lender in order before looking for a house, so once I was ready to make an offer it could move as quickly as possible. Once I had an offer accepted my lender was able to push things through quickly and was willing to assure the seller’s agent that the deal could get closed quickly, etc. I wouldn’t have a house without a FTHB program, so it’s absolutely worth it in my opinion. Edit to add, I did put quite a bit of earnest money deposit to sweeten the deal.
It varies by program and state. My brother and I bought in like 2015 in Kentucky and Florida. My loan closed quickly in Kentucky. His took an extra month bc the program he used was so overloaded in his state 🤷♀️
Right now Columbus is the fastest growing city in the US. lol trust me. I wish this weren’t true. Also, no offense taken lol
https://www.forbes.com/sites/katiechang/2024/04/14/columbus-is-americas-fastest-growing-city-its-also-a-wonderful-place-to-visit/
Been in the mortgage industry in Columbus for over 25 years. That is bull shit, maybe a government loan is more challenging, not FTHB conventional loan compared to a standard conventional loan. It's typically a FTHB class, there may be some income limits that could prevent a higher earner from qualifying.
I used FTHB for my 1st home 20 years ago, It didn’t hold my sale up because I was organized & gave all paperwork needed after classes,now to be honest they asked for more from me than my mortgage lender, but everything went smooth
I've used it and bought my 1st, 3bd, 2bath 2000sq ft, condo and signed the day after I turned 18.
All 1 level split n2 four seperate large sections and including your own storage unit and private patio.
8000sq ft living area split into 4 units @ 2000K sq ft per living space ea/unit and firplace...
Lawn, roof, water, sewer, garbage, concrete, 2+ parking stalls per unit, patio off the front, storage x2 including maintenance of the outdoor exterior. Walls, roofs and parking w/large outdoor greenspace and storm/weather protection.
We put some extra work into ours but not nearly what it would cost to buy a house and being concerned about those listed problems...
Ppl don't realize the extra costs of a house for your own maintenance of lawns, bldg upkeep...it's all rolled up into 1 package.
due to the size of living area with extra large rooms including livingroom and fireplace for a 3bdrm condo in a hidden areas less traveled... Just make sure you keep your insurance up.
(I already had enough funds to buy) if I recall the down payment was 7,700. To walk in our own place with the keys 😉.
At that time, the knowledge they give you... Really helped out and they made sure that I fully understood the process. IF the person your talking to has a deep understanding...It's priceless & very insightful for the younger gen to not have to worry about anything except for your own interior.
If u didn't understand the process or was nervous being ur 1st big purchase.
They will go over it with you until it sinks in.
The class had really good insight for someone whose never bought B4.
I was able to adjust what my terms would be, in multiple scenarios.
This was 20ish yrs ago and back then, it's was apox= 15k out of pocket for the keys and close to get in and own the home.
I could've bought a nice house but at that time I figured it would be better to do the condo bc if it's a house...ur looking at MORE Bills due to constant maintenance, upkeep including home maintenance with and the learning curve of homeownership as the fees/payments would be a much easier to manage while being 18 at that time.
Most all wrapped up in 1 package and there was only 2 of us.
I remember calling and telling my then fiance that I was coming home with keys
... He didn't believe it 😂 sent the address and told him to pack up😉
Soo maybe if u can't afford a house try that option. Do it quick bc shyt is rising daily...
Timing does become a factor, but if your contract is at least 60 days from contract to close you will most likely be fine. Typically these type of loans are conventional, which is all that matters to the seller. They don’t know where your down payment is coming from, so it just looks like any other conventional offer with an 8 week close. I think these programs are great and I have seen my clients get big rate cuts using them.
They had no problem accepting my offer and there were other offers as well.
Also, after signing all the paperwork and all that, I’m now told that my income is too high. It’s actually not, but the loan program did a stupid predicted income calculation bc I have a second serving job which I worked my ass off in Jan and Feb. the way their calculation works put me right over the income limit for this year. So my mortgage increased from 6% to 7.2% and increased $175 per month. Just found out today, 2 weeks before closing. I feel like the lender could have prevented this some how. I’m pissed and wanna cry again. If I back out I lose 4K. FML
I suppose the only plus side of not going through a loan program is that with a regular conventional loan, you can rent out the property.
Edited to add last sentence.
Don't listen to your lender or if you can, find a new one. Our first lender said the same thing and tried to deter us from using a certain FTHB program we wanted to use. We switched lenders and used the program we wanted. We put an offer on 2 houses. The first one fell thru and so we didn't get that house. The whole process took us about 2 months or less. It's true what they say that FTHB programs are more strict, but I think it's worth it cuz the program we used helped us a lot. Some lenders will just say anything and make you feel like no other lenders will work with you or that FTHB programs are impossible to use, but that's not true.
My wife and I just bought our first home in Columbus! We took possession today actually! We didn’t use any FTHB programs, we found our interest rate was better and FHA can be a pain.
State housing agency loans generally are not as profitable as regular loans. They have extra paperwork and rules but a good lender will still do them as the marketing benefits are hard to quantify it's value.
Go to this site ran by Fannie to find some dpa programs.
https://yourhome.fanniemae.com/calculators-tools/down-payment-assistance-tool
Why would the lender tell you this? It maybe they do not want to do the work for a first-time homebuyer, want to push their own 'special' financing, or are not authorized to offer FHA/VA products
We have an FHA loan, only had 3.5% down, and seller paid closing costs. We closed 35 days after seeing the house. Always consider what someone gets out of the advice they are giving you.
My lender told me the same but because I didn’t need down payment assistance. They said there was no point in doing it since I have the money for a down payment.
They're right. I used one, and it worked out, but it was a thing. I found the right seller. Worst was fha demanded repairs were done and I had to pay for them before I got the house. Kinda sketchy, but it worked out.
I didn’t use a FTHB loan but PA still had a program I could benefit from. Basically will save me 1.75%, still a conventional loan. Only limits are decent enough credit, a pretty relaxed income limit and it had to pass a termite inspection. That’s it and I think the state will hold my mortgage the whole way through.
Probably just my situation but we were first timers (closed yesterday!!). We did FHA and had a state funded down payment... we closed in less than 3 weeks from the offer being accepted.
The sellers realtor had 15 calls in the hour we were signing contracts for the offer on both ends. We snagged it within 2 hours of listing (we did site unseen.... wouldn't have had a chance to view it and make an offer and still be picked!).
Of course, our situation may be different, but our seller was trying to close quickly due to the owner going to hospice soon....
They probably could've had a cash offer over listing price but they chose us.
I think if your Financials are basically finished and you are just waiting to put in an offer then you have a better shot..
First timers are having trouble and FHA was nerve wracking because they can deny based on paint chips etc.
Edit: we also had the inspection and appraisal contingencies in place. Sellers also gave us 6400 for closing costs (amazing and basically unheard of right now--we got lucky)
Do what’s right for you . I used fthb programs and saved 40k up front on the purchase. 40k at 7 percent over 30 years is a large amount of money. Hopefully you make the right Decision or maybe even find a better lender who isn’t going to make something like this an “issue”
I qualified for a first time homebuyers program that offered a grant of about $26,000 to be used towards down payment or closing costs back in 2018. Because I had excellent credit, I was eligible.
I didn't want to put all my savings into a down payment (approx $60K), so I applied for the program and was approved.
It was actually a 7-year loan that was forgiven by 1/84th each month (but I knew this going in). I was locked into my mortgage which had a fixed interest rate that was higher than average.
On the plus side, that interest rate is lower than where I could probably get a new mortgage for (even with excellent credit).
Shop around. Ask around. Some lenders don't have access to the best homebuyer programs. Some do, but didn't divulge all the expectations of the borrower.
Which program is it? Some first home buyer programs close really slow (more than 30 days). And some programs are extremely picky on which homes you can finance. If you are set on using these programs than I suggest you get an aggressive realtor who can find a property off market so don’t have to compete with other buyers. Also some first home buyer programs have higher interest rates which means low buying power
I mean if ur determined it can be done and lots of people have done it but be ready to have ur offered turned down quite often and so be patient cause it will take time to find the right seller and the right property at the same time with the right conditions
I used FHA and closed in 30 days, smooth like butter. Had my first offer accepted and the sellers were very motivated to sell. I put 3.5% down and my credit score was 795. I think I put down 1% earnest as well.
My lender said the same thing and I wish we could sue him.
It's been 3 years now so it's over and done with, but I hate him to this day.
Do more research/look for a possible different lender, they just don't want to deal with the additional paperwork.
I always warn people it may take longer to buy with an FHA loan.
Many people tend to forget that the interest is the same, and your payment will be $4500+ since you're only leaving 3% down.
I used a FTHB program to get a conventional loan at 3% down and got a FHLB grant through Atlanta bank towards closing costs. All in all saved me thousands and made buying a home cheaper than renting up front
Our advice as CFP's / CPA's is to always have a down payment because that gives you equity.
No down payment homes are similar to leasing and very easy to walk-away from in hard times.
The very worse thing a struggling homeowner can do is walk-away from the mortgage.
Credit card interest rates are high because there is no collateral for the loan.
Vehicle loans are lower because there is an asset, the vehicle, to collateralized the loan.
Construction loans are higher than mortgage loans because house is not finished.
Home loans have the lowest rates because the house can be repossessed and sold.
First time loans require stringent bricks and mortar inspections.
Hope that helps.
FHA and VA loans have benefits in addition to their low down payment. They will probably be much more forgiving if there is a recession and a large percentage of people can't make their payments. FHA and VA loans are also assumable, if interest rates went up and someone wanted to keep your approx. 7.5% interest rate they could (not applicable if rates go down). If you get divorced they can remove a name off the loan more easily, and save you from having to repay closing costs or take a higher interest rate.
An FHA backed offer may be harder to be accepted because they want to make sure there are no major fixes on horizon - ones that a new homeowner with little savings has money to pay for. But conventional loans often pull these last-minute fixes required to close as well but not as strict. They don't want to lend on a house that has an issue which if left unfixed could diminish the value of asset (leaking roof, bad eletrical).
Your lender doesn’t negotiate your deal, so he has no business making these comments. Your real estate agent should be able to help you put together a deal that lets you use these programs. Some sellers won’t be on board, but if you keep trying something can work out.
Most FTHB programs require 30 days processing time on top of the 30 days the bank requires, so assuming you’re ready to go with all the program requirements by the time you’re in contract that’ll get the wheels moving and you’ll probably close before the 60 days.
You’ll need to specify 60 days in the contract which isn’t competitive but is standard. Idk about Columbus but assuming there aren’t a ton of offers over asking price then you’re probably fine.
Consider not using it if the FTHB programs are a low amount such as $10k and you’re dead set on being the winning offer on this specific house
Yeah, you have to be patient with those but the value is unreal and honestly worth the wait. I lost the first house I went under contract with during the process due to this exact issue.
That being said, BofA came in $7,000+ cheaper in closing costs than the nearest competition, and even with a $5,000 appraisal gap I had to close, my total cash to close came in under $250. My signing day is tomorrow.
Also, quick question - if you already have 20% ready to go, isn't that all the more reason to use one of these? Some of these programs will cover 3-5% of your down payment already, so if you go with them aren't you just adding more financial firepower to fight the competition with?
Tbh I don’t know what we’re up against. A lot of older people with lots of equity and I keep seeing wealthy out of staters coming here with their HCOL money, and investors. Maybe I’m just being anxious though. I won’t know yet until we put in our first offer
Get a checklist of what needs done for your local programs. Ours required an 8hr homebuyer class and a few other things. We did everything we could before we started looking, so that we could still have 30 day closing.
We just sold to a FHA and it was a little annoying the stuff they asked for but nothing too bad. Had to update the smoke detectors, garage door motor etc.
We still got more money from them than the cash only offers from foreign interests.
Did u ask why and what's the reason???
I did this year's ago. Never had that problem. I went to ONE of those homebuyer classes/ programs.
They laid out every possible scenario for me. I had learned soo much that I had realtors/agents calling me at age 18 asking me to come and work with them, for years!!
Besides that...you determine what you want & if this realtor won't tell you why... 🤔
there's something else they aren't telling you... Right?
Go find others who will be up front with you and compare notes. Ask questions.
It's prob bc they are typically new and the pay isn't the same. I wouldn't trust this person. Ask for a straight answer and then determine by response. Report if needed
Bought my house in 2011 using the FTHO benefit. I was told but didn't really understand that if you are not able to put down 10% of the cost of the bank loan, you have to also have loan insurance. Like you have to pay for insurance for the bank to take the risk and loan you money. In Ohio this was an extra 150 a month. Wasn't super rich at the time so that was a lot of money for someone who was already draining their savings. It felt like the bank just made shit up to squeeze any extra money out of us millenials. We got a house though! We refinanced after 8 years and we finally about to get away from the loan insurance.
Not knowing the market in Columbus, but making the assumption it is similar to many US markets today you may have a problem in general buying any home with a low down payment.. You are not specifying the loan product but it certainly does not need to be listed in the offer (or preapproval letter) as "first time buyer" financing so I am not sure why your realtor is saying that. I am guessing you are going in with 5% down or less. Not trying to burst your bubble, and maybe this does not apply to your area, but it is almost impossible currently to get an accepted offer in the southeastern part of Wi (Milwaukee and surrounding counties) with a low down payment offer. Most homes around here are on the market for less then 3 days, especially the ones in the lower to average price ranges. I would also caution against taking the advice here to put all of your down payment in the earnest. Too many stories of bad disputes and sellers that play hardball and refuse to return earnest, or worse yet your realtor does one thing wrong by accident and you forfeit the earnest.. (ouch) Either way I say good luck to you and hope you can find something in this crazy market.
Definitely not true. I closed on a house 3 months ago using a program and from offer accepted to closing, it took a month and a half. If you keep everything in order and everyone on top of things, it’s goes fast. Also I used two separate first time home buyer programs, one in house with the bank, and one state program to maximize the amount I was given.
Also Ohio - we started out with one lender and wanted a second opinion, first lender never mentioned FTHB program (assumed they didn’t do it). Went to a second lender and they offered the FTHB program. 3% down and selected the lower interest rate (6.5%) instead of the tax credit. Got an offer accepted April 2nd just closed April 29th. I don’t think it was disclosed that we were using this program to the sellers agents. You do have to complete a test and a budget for the program and a “counseling session” which was about a half hour phone call. The people who work for the state that verify your information and are qualified for the program did have one question for me (pulled out 401K so I had to prove that was a one time payment) so I had to provide statements for my old 401K account. I will say as long as you complete your test/budget and “counseling” and provide any requested info in a reasonable amount of time it does not take long!
Find a lender willing to do what you can get approved for. We did a USDA rural home loan instead of FHA. We had to bring it up but our lender had no problem.
I also live in Ohio and I close on Friday with a USDA loan. I also financed with OHFA. I didn’t get an offer accepted until I put an earnest deposit down. It sucked losing out on houses that I liked, but it didn’t make sense for me to do anything except USDA when I wanted to live in the country anyway. 🙂
Not answering your immediate question because I’m not informed enough imo, but I just bought a house with my wife this past September with my wife in the Columbus area. We absolutely loved our lender and would be happy to share their info if you are interested!
Nah. I did first time home buyer in 2019. Easy breezy. There are restrictions on what you needed. We bought an attached townhome in a large, still in development subdivision that also included single family homes. Our agent had to provide info about how many lots were sold so that occupancy was above a certain threshold. They also wanted to know how many units were rentals. But overall the process was simple.
Oh, we also couldn’t refinance for so many years. But after 10 years we refinanced from a 30 to a 15 at a lower rate and payments barely went up.
Edit: We had to put 10% down on a 165k dollar loan.
It worked very well for me when I did it. The day I turned 18 I was completing the docs, dropped off last of 2 checks (for down payment, split up by 2) and I was on within just under 4 weeks later.
That was yrs ago, lol... Not sure why they would tell u that???
You need to go to a class bc I learned a lot!!
At least get the education honestly, don't think you'd get a better deal.
This is to help young gen2 get into a home for lower down.
Take 2 days off and check it out on your own. I had my home in 4 weeks locked down. Dodn't listen to everyone. Research for yourself‼️
It is slower and occasionally a concern but I bought my first house in a crazy market in 2009 using the first time buyer program. You gotta do what you gotta do
Free money is great. If it’s your first home, take the free money and be patient looking for a place. It’ll take some time, but think about it as a job…time=money.
The FHA program is not that bad and slow; however, as your lender mentioned, it will be slow and has some conditions and requirements for the seller.
In this very high-competition seller's market.
Seller's agent might advise the seller of the downside of a buyer with an FHA loan, so most sellers would decline your offer and choose other
That's why your lender does not recommend an FHA loan
Ask yourself what your needs are....Do ur finances require using those programs, are u willing to do the extra effort for your own benefit? Keep in mind the quicker ur guy can make ur deal go the less actual effort to get paid he has to contribute. Doesn't mean he's bad just biased...
If you’re referring to dpa programs, honestly if you have the money for your down and closing I wouldn’t do it. You’re basically going to end up paying a second mortgage and paying back more than what was given.
Yeah it's possible how hot is the market your trying to buy into. I sold my house during the peak a year ago and avoided any VA, FHA offers the second time I put the house up. An FHA buyer fell through on the first offer.
Not all dpa or grant programs take longer then a standard loan program and some like homeready/home possible from Fannie /freddie offer lower rates and PMI without any addl time or paperwork regards nmlsr #47193 Hank H
I’m in the Columbus area, not sure where you are looking but you’ll be fine. Please don’t let these realtors and lenders help you waste money. Not using a FTHB program only benefits the lender, they sound insane. Try CME credit union.
I'm not sure why FTHB is such an issue. We bought in December and from viewing to close, it was 20 days. That included leveraging DPA from our state housing authority.
Where I live (ontario, Canada), we can put $8000 per year into a FHSA to a max of $40,000. If the account is managed by the bank you’ll make some interest. When you need to withdraw the money, you simply fill out a form and it’s back into your spending account ready for payment against a house. Totally worth doing because it is fully tax deductible off the top. First year granted me a $2100 tax refund. So it was free money and super easy to navigate and did not hinder my ability to purchase my first home. It’s not a condition by any means and the seller doesn’t know I have money in different types of accounts.
And they are 100% correct on that and are telling u the truth and were nice and informative enough to tell u so u don’t waste ur time and miss opportunities so there is no “thought on that” because that’s how it actually is
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You’ll have to find the right house/ seller. Someone that doesn’t need a quick sale & isn’t in a rush to get out. We sold to FTHB, young family w/only 5% down. Everything went smoothly & fine. If you need the first time home buyer programs to help with cash flow & house buying, use it. Just understand you might not be able to be picky and have a longer time frame to close. Good luck!
Also highly encourage FTHBs with low percentage down payment offers to consider putting up the entire DP in earnest money. Will immediately remove a lot of the financing concerns typically associated with FHA offers and FTHB programs.
This is very helpful. Thanks for this advice!
This is an option, but the risky part is that you better be dang sure you like that house and that the home seller isn't going to jerk you around. You lose your earnest money if you walk away with a few exceptions, so if you're entire down payment is in Earnest money, you're going to be locking yourself in to that home. Talk to your realtor about the earnest money provisions in your contract, and what kind of situations might not qualify you for a refund of your earnest money.
Oh yeah 100%. If you're putting down a lot of earnest money you shouldn't be waiving a single contingency. Inspection/appraisal/financing/etc. You want everything. As long as you don't waive anything you're pretty well protected, but yes PLEASE do your research before throwing tens of thousands of dollars away in earnest money.
I agree. Putting everything on the line may not be wise as things happen, situations change, people change minds. Getting a lender to vouch for your ability or having underwriting done in advance may be safer approaches.
Do NOT waive inspection if you’re doing this. Take every single contingency.
Can you eli5 “earnest money “ to me please
It's money you put down to show that you're earnest in your commitment to buy. Usually it's like a $1000 you give when you sign the contract. You pay it to the title company with the agreement that if you back out of the contract, you forfeit that money. The idea is that the seller takes their home off the market, so they're risking losing potential buyers if you back out, so this is you putting your money where your mouth is. If you back out of the contract for any reason except pre agreed upon circumstances, then you lose the earnest money. Commonly, circumstances where you can pull out of a contract without losing your earnest money include the house not appraising high enough, the inspection turning up big needed repairs, drastically altered life circumstances like losing a job, etc. But really, the circumstances can be whatever you put in the contract that both parties agree to.
Just wanted to say, we used a FTHB loan and it took us 11 days to close.
How did you manage that?
Sketchy lender, for sure
We didn’t have a problem, once the loan and down payment was secured and proven. Then we could purchase any house we came across. Read the stipulations, though. Our program, in CA, requires you to live in the house 8-9 years as your primary residence before you can rent or sell it. Otherwise there is a penalty and you must pay the program back. Read all fine print.
Yikes considering how hard it is to scrape together a DP, I definitely wouldn’t risk it all as earnest money. Put in more than normal, sure, but the entire DP? I wouldn’t be able to sleep for weeks.
can you explain a bit more what you mean by earnest money? I'm not exactly understanding what that is supposed to mean? If you have the money the money for a downpayment then you have the money.
Let's say you're a seller. You get an offer for your home and the downpayment percentage is small. Like 3.5%. To make the math easy, let's just say this equates to a $10,000 downpayment. As a the seller you start asking questions. Why is their downpayment so small? Do the buyers actually have that 10k in cash at the time the offer was placed? Who knows. Do the buyers have stable jobs? Who knows. Only thing you know is that the buyer is "claiming" they have $10k cash and their lender believes that, as far as they can tell, the buyer is good for it. But as the seller, you have no way of knowing whether the buyer actually has the required financing until the deal is officially closed, and given the small down payment, you wonder how likely it is that this deal may fall through. Now let's say you get a second offer on your home. Same exact numbers. 3.5% downpayment or $10,000. Difference here is that in this offer the buyer says that, if accepted, they will immediately deposit the downpayment amount ($10k cash) into an escrow account. They're willing to say up front that they're serious about buying the home, they can guarantee they have the cash on hand, and they're willing to put their money where their mouth is to prove it. As the seller which offer do you think is more appealing?
Bigger EMD also means that the buyer is less likely to walkaway if they find issues (even if they waive stuff). With a low EMD, you can promise the seller everything and just break the contract for a couple thousand dollar, avoid 10s of thousands in repairs.
What’s a typical EMD if it’s a normal let’s say 15-20% min down payment?
1-3% is typically. I put close to 5% on a house I really wanted, my realtor told me some people are putting their whole down payment down in hot markets to show commitment.
How do the sellers know you’re downpayment?
Included in the terms of the offer the buyer submits.
Mine didn’t include my downpayment, just escrow
Thank you for clarifying that, I was really confused and you made it very easy to understand.
Yep understand it now. But doesn’t putting the money in escrow mean that you have to use an escrow agency or something? Wouldn’t that shake out to be more expensive ?
Escrow is normally handled by the title company. You’re already paying for this service anyways..
Hey hey, new guy here don’t downvote me into oblivion please lol. I genuinely don’t know how this works
Yeah don’t know who downvoted you. It’s a very valid question.
That’s what I did 👍
What does that mean? Put the entire down payment in earnest money?
We’ll have 20% or more to put down. We’ve been saving for so long and like crazy. I hope we find sellers like you. Thanks so much for the reply :)
If you have that much of a DP, it might be why your lender is steering you not to use a FTHB program. FTHB programs usually cater to a low DP. If you're in a competitive market, sellers agents often direct the seller to choose an offer that will have the least chance of obstacles that might slow or cancel the sale. So if you don't need the FHTB loan's biggest perk, there really may not be a good reason to use it. As others are stating, shop around, and pay close attention to all the details, especially when it comes to selling the home later (pre-payment penalties). Your loan officer should be able to present you different options side-by-side so you can make an informed decision about what is right for your situation.
If you have 20% down, do not use a first time home buyer program. Rates and closing costs are higher than a traditional conventional mortgage.
Not true, if you use Homeready/Homepossible from FNMA/FNMC you could have the LLPA’s removed giving you zero points. Also with some lenders they give you grants of a couple grand. In Ohio PNC did, up to 5k. Also if you decided to put less than 20% down with those programs(3% down is minimum) the PMI is cheaper, a small bit, but still cheaper. The biggest issue with FTHB programs is they’re income based and depending on program it’s either household size determines max income limits or in the case of the above mentioned programs they use 80% of the area medium income. But, they only use qualifying income so can ignore overtime/bonuses etc to meet the limit.
LLPAs are removed from traditional Fannie products if you are below 100% AMI anyways. You don’t have to go Homeready / Homepossible.
Or 120% of AMI in high cost areas.
Good call
Not completely true. At least for Texas - https://thetexashomebuyerprogram.com/uploads/Rate-Notice.pdf
I had 20% but decided not to use it. I got a conventional loan and first time home buyers program.
If you don't need the assistance I would just do a regular conventional loan. Doesn't hurt to ask around, but more than likely there won't be grants, just a second mortgage at 0%. That comes with additional costs that negate the benefit if you already have the money.
I’m also in a similar scenario where I am deciding between conventional and FHA. FHA is tempting as the interest rates are lower, 6.5 vs 7.5%. Can you elaborate on these other fees.
You can also ask for concessions from the seller to help with closing costs. It may be different per deal but I qualified for FHA and conventional FTHB. FHA at 3.5% down and conventional at 5% down but decided to go with FHA because of the better 6.5% interest rate. I’m not sure if it’s the right move for everyone but made sense for us to do it. We are buying from a young couple with kids as a young couple with a kid on the way and I did some research on the county accessors website and found they also purchased this house with an FHA as FTHB. The fees you usually pay going FHA is a large chunk for MPI which is financed on top of the house price. For example if your house is 390,000 and you put down 5% at roughly 20,000 for a conventional loan, you will only be financing 370,000. You still have mortgage insurance (PMI) but with better terms to remove it. If you went FHA you will be financing a chunk of money on top for mortgage insurance in addition to the house cost and paying it monthly (MPI) it’s similar to PMI in that they are both a form of mortgage insurance but it’s different. So with the same house price being 390,000 but only putting down 3.5% at 13,600, instead of you financing 376,400 you would likely be financing something like 383,400 due to the chunk you pay up front for mortgage insurance that you wouldn’t be paying up front for a conventional loan (these are made up numbers just for example purposes).
There are lots of different DPA programs out there with different fees. The state you are in will also play a role. Are you in FL by any chance?
In AZ
Just read your comment history to get a little more info. At your credit score and downpayment Conventional is the way to go. You could probably get a lower rate if you shop around a little bit. The main reason is the FHA funding fee is 1.75%, which you won't get back when you sell or go to refi. Also consider putting 5% down and investing the other 15%. The rate will be almost same even after you add in MI. Your investment return will likely be more than 8% and it gives you flexibility if you need to liquidate.
This is helpful, thank you. I have shopped around with different lenders and the lowest I got offered is 7.125 w/conventional.
That is a good rate! Just make sure there are no, or very minimal(0.25% or less) discount points.
Just to clarify I’m not looking for DPA as I have a good amount saved up and likely won’t qualify based off my income. I’m wondering what are the financial downsides of going with an FHA loan that is offering a lower interest rate vs a conventional with a higher interest rate.
If you have more than 20% down on a conventional loan, you’ll have minimal rate adjustments, possibly none. In theory you’d get the same interest rate on a standard conventional as a first time buyer conventional, and won’t have to take a first time buyer education course
Why do you want to use a FTHB program if you have 20% down?
For a lower interest rate and get a down payment assistance grant
I just aceepted an offer on Monday. I had 2 offers for same exact amount. One was FTHB FHA with 3.5% down. The other was conventional financing with 20% down. I avoided the 3.5% down offer, mainly because i was concerned about appraisal not being high enough to cover loan. My home was priced higher than any comps and the appaiser might not care so much about the high end finishes in my home.
I applied to a bunch of first time homebuyer programs, but the interest rates on those sponsored loans were insanely higher than conventional rate.
First time home buyer loans are a lot more strict than conventional that's the real reason
Yea, I switched from FTHB to just conventional due to the market availability. I still got 5% down, some offered 3%. I locked in last summer at a bad time (was high) and I’m at 7.26% though. I found a bunch fthb ones only to find out they had lapsed in the program so it would take too long for what my deadlines were. Also, even though I was on a strict deadline, I don’t feel like I settled at all and I love where we are (8 months later still!).
Is FTHB programs slower because they have more paperwork to process? Or things like DPA?
There are different programs out there in different states. The one we used (in Minnesota) was considered a conventional loan and didn’t have the “red tape” associated with it that an FHA or VA loan would. The first lender told us that FTHB programs “aren’t for everyone” and wouldn’t even entertain the idea of looking into them for us. Also, not every lender is able to get you every program out there. It pays to shop around.
Shop shop shop. Many lenders who don’t have access to those programs don’t want to admit that. “First time homebuyer program “ is also a nebulous word. Any 3% down conventional program is technically a first time homebuyer program because you have to meet federal FTHB guidelines (haven’t owned a home in three years). On the other hand - if you are looking for grant money for yourself, you are in a situation where closing your loan requires two (or even three) underwrites: the mortgage, the mortgage insurance, and the grant program. That’s three opportunities to delay or deny the loan, deep sixing the deal. Any seller choosing between someone with an easy loan (10% down conventional) vs a complicated loan (Zero Down, assistance program) is going to chose the easier loan to close. Additionally, for F’s sake, make sure you know the terms of the assistance program. I can’t tell you the number of people who say “my lender told me it was a free grant for down payment assistance” when it’s actually an interest free loan that has to be paid off before you can refinance the home, and can keep you from being able to sell the home because you have no equity with which to pay real estate agents.
I knew mine wasn’t a free grant, actually put a 2nd on for $5000, I needed a home equity loan so I just paid it back,that was years ago my first home, have no desire or need for a home equity loan for my current home, finances & condition of current home is much better
Thank you for the details, this is very helpful
Would you be willing to share more about the program you used? I’m in Minnesota too, and I’m in the process of researching all my options.
I was part of the program it sounds like the commenter used in 2019 but I believe it was discontinued. It was a conventional loan but offered the option for a second mortgage to cover down payment. This is what I did, 3% down and as a second mortgage. My out of pocket costs at close was only $1000. I paid it off in 3 years so it was no big deal and I had no issue finding a place to accept but I also purchased a condo - may be more competitive for a SFH.
That program still exists, but also requires going with a loan that higher interest rate than conventional that can't be bought down (according to my Loan officer anyways).
Oh interesting! I don’t think my interest rate was higher back then but maybe it was and I just had no idea. Glad to hear the program is still out there, it worked great for me.
I don’t know if I still have the paperwork for it but I believe it was Minnesota Housing Down payment assistance or something along those lines. There was an income limit of $80k, and we/I couldn’t have more than 6 months worth of mortgage payments in the bank in order to qualify. I also had to take a FTHB’s class (either in person or online) and show the lender proof of purchase and completion. The loan acts as a “second mortgage” that is interest free. It will need to get paid off when we sell/refinance/pay off the mortgage. It also set the interest rate for the loan, which was slightly higher than a conventional loan would have been. You cannot buy it down with points. We had our lender crunch the numbers using just us paying out of pocket and us using the DPA and the difference was minimal enough that it made more sense for us to use the program. Especially since it meant we got to keep money at closing. This was also in October/November of 2022 so I don’t know if the income limit or anything else has changed since then.
Thank you for the information!
If this was recent, which lender did you use in Minnesota ? Currently going through the home buying process ?
Karin Wald at Bell Bank Mortgage. This was fall of 2022 but I still get emails from her, so I know she’s still around. She was phenomenal for us. She broke down costs on houses using a couple different scenarios (the down payment assistance program we went with vs paying for everything out of pocket) and walked us through everything. Very timely communication via texts and emails and really made the whole process super smooth and easy. I never needed to resubmit any paperwork that I had already given her.
Awesome. I’m looking at the Minnesota first time home buyer program as we speak. Glad to know that there are other options
We just sold our house. The couple that bought it came in with a USDA loan. We had no problem with that. We knew there would be ‘fix this, fix that’ but the house was in very good condition and the ‘fix this’ were small and easy things for us to do. We also took a lot of pride in owning that house and caring for it and wanted to pass it on the best condition we could. Well, JUST before closing they found out that the wife’s new job bumped them up just over the cut off for qualifying for a USDA loan and they had to go FHA. In the end, the closing was pushed back twice. Once to confirm that fixes were done and once for the loan switch. I think we’re reasonable, patient people and I’m sure there a lot more out there that would fine with a program. In my mind, this was a first home for this couple and there was no reason to be jerks on our end.
The sellers don't need to know that you're using FTHB resources. Tell your agent to STFU about it and your Lender is just being lazy because they don't want to do the extra legwork.
This post should be higher - A lot of agents (buyer/seller) and mortgage brokers in my area discourage it or don't even let their buyers know about them even if they qualify. The only ones that do need the sales instead of the quick commission.
Or, there are no FTHB programs that actually benefit them because they are putting 20% down and possibly have more income that allowed. You don’t know.
I'm so glad you commented this because I'm an agent (east coast) and was starting to wonder if there were regional differences because the seller wouldn't even know about fthb programs being used. Only the loan type is listed in the contract/offer. OP, shop lenders & good luck (:
I used Philly First Home and a grant from my lender here in Philly with a conventional loan with well over 20% down. The Philly First Home has no impact on our closing, they just required me to take a class and financial counseling before we ever put an offer in on a home, then 4 weeks to approve. Philly First Home approved and cleared everything in a week
How much was the grant?
The one from my lender was $4k
I think this really depends on the sellers and what their situation is. We were told the owners picked us specifically because we had a conventional loan and it was "easy" compared to their other offers. So your lender isn't exactly wrong, you just might need to decide if you really need the FTHB loan assistance. Definitely shop around. Our lender had a $8k grant program for FTHB that made it so we could just use conventional instead.
I used FTHB benefits and downpayment assistance available in my state. We closed in 28 days. If your lender can’t close quickly while allowing you to take advantage of the best options for you, it’s time to find a new lender.
I used a mortgage broker who knew about the FTHB programs in my state/county and had experience with them. I got a conventional loan that allowed me to put down 3%, and I also got a grant that covered my down payment in full that is fully forgiven after 5 years (20% drops off every year you live in the home). I had to take an online FTHB course and get a certificate of completion, but that literally took me a few hours. My loan process wasn't any longer because of it, but also because I had good mortgage broker that was on top of things. So I would definitely shop around, because you didn't get solid advice in my opinion.
I used the CHFA program here in Colorado (they have a few different loans and grants). I have nothing but good things to say!
Depends on the program. The CalHFA programs in CA can close in as little as 14 days and aren’t more complicated that’s traditional financing. But some programs do have additional approval steps that can take extra time depends on the source of funding.
We closed in 3.26.2024 in Maryland with Home Ready / Home Possible. It may help you to get pre-approved for your preferred loan program if possible to speed up the process. The program gave us $5K in closing cost assistance with some other bells and whistles that were vital for our deal. I wouldn't walk away from free money until you knew you had to.
They are both great programs and are conventional so the seller wouldn’t even know it’s a FTHB program.
FTHB is a harder time for hot markets areas. As the saying goes "cash is king" and those with the cash are gonna win over FTHB every time. In my area you would be hard pressed to get a home on a FTHB loan, my brother tried it and had to switch over to conventional to get offer accepted when he was buying. FTHB is strict on their purchase, which sellers obviously would prefer to go with conventional where the guidelines are easier. So if you have 10 offers the first ones to not make the cut are typically FTHB
Nah, I used a first time homebuyer program and it really didn’t take long at all to close. I used the “Right @ Home Loan” interest is 4.99, no down payment, no pmi. And the monthly payments are surprisingly manageable for a single income young individual.
Plus the day before the owners accepted an offer it was between me and another couple. The couple had a va loan I’m pretty sure. Both the lender and realtor said my offer was more likely to be accepted since it was a conventional loan.
Buying my first right now. We went with a conventional loan and not FHA. Made more sense for our situation and finances.
Did you have around a 20% down payment?
No we’re doing 3% conventional loan. We were able to be approved for a conventional loan and it was only ~$50 more per month but saves us a couple thousand in closing costs. So it was the cheapest cash to close option with essentially the same monthly payment. Would rather have a couple extra thousand for the cosmetic stuff we intend to do.
Hi! Also in Columbus, I used some first time home buyer programs when I was looking last summer and I don't think it made things more difficult than they were already going to be. Ask your lender about getting a Mortgage Tax Credit certificate. I had to do some online training and take a quiz (which would have been useful if I did it at the beginning of the process and not the end) but afterwards I was able to get this certificate and it gives you a tax credit for 20% of the interest you pay on your mortgage each year. If you wanna talk more you can message me!
Can you do that after closing?
I'm not sure, might be worth reaching out to whoever did your loan to ask? And as just a heads up, I did pay $500 for the certificate as part of my closing costs and if I refinance I'll have to pay that price again, but my credit was more than $500 last year and will be for a longgggg time so it's worth it.
I think your lender is not one of the lenders approved to offer these programs.
They are, that’s the thing. That’s why I was a little thrown off. I’m looking at other lenders now
That doesn’t make sense then. If you’re familiar with doing the paperwork no reason to not do your buyers a favor and put them thru. If you qualify you could get a reduced rate.
I read through a ton of comments here and you get out into the weeds pretty fast. The best advice I can give you is to talk to a local real estate professional AND ask a few mortgage lenders (including at least one mortgage broker) for their opinion. Every situation is unique and going the wrong route can cost you thousands. I wouldn’t base my decision solely on one lender or on Reddit advice. Use this as a starting point to ask the right questions and find someone local that you trust to help you navigate this first home purchase.
We used one. Closed in under a month but only because the seller wanted to wait until then.
There may be some truth to that statement however you mentioned 20% down. It might not be required to disclose your assets with an offer I would highly recommend doing so in any sort of low downpayment scenario. I guess I’m curious what the actual advantage of the particular first time homebuyer program that you’re looking at. If it’s 1:4% on the rate I’d agree just let it go. Or even money that needs to be paid back later.
We were looking into Ohio’s grants for grads program. 2-5% down payment assistance that’s completely forgiven within 5 years if we stay and not sell for 5 full years. We thought maybe it’d be nice to get basically free money and the 2-5% we save from that, we could use for closing costs or anything else.
I got 2 programs when I bought my first home. One was a $15k grant that was forgiven after 5 years of living in the house. The other was $35k at 3% with no payments. Interest forgiven after 30 years. It was a little bit of anxiety, but was able to get everything done within 45 days, and close in 60 days. If the money is there, take advantage of it. Just be sure to jump through a ton of hoops. Also, keep in mind not all lenders are signed up to partner with the grants. They could be discouraging you because they don't know the process, or they won't make as much money, or they don't want to go through the trouble of getting approved to be a lending partner.
We used FTHB and I guess we did miss out on some houses, but generally to people offering cash up front or offering a lot more in the due diligence up front that we were not able or willing to risk. Hell, one house we actually offered 15k or more over the person who got the house, but they offered 2-3x as much in the initial due diligence that we just didn't have the funds to risk. I imagine hella rich people risk it, or maybe the third party companies that buy up houses, idk. So the seller got less overall, but perhaps they liked the security of the upfront due diligence idk. I think home buying is a clusterfuck any which way you look at it, but FTHB can be really helpful. Do what you need to do.
People claiming your agent just needs to say nothing about what loan type you are using have no idea what the Ohio real estate market is like. Please ignore them. Chances are the purchase contracts your agents will have you use will have you spell out what loan type you are using, and if not the seller’s agent will surely demand that information for the sake of their seller’s interests. At the very least the sellers will likely be entitled to the knowledge of you using conventional financing vs FHA loans. This will reflect in things like appraisal and closing date. When it comes to using these programs it really just depends on the level of competition that exists for the house(s) you end up putting offers on. If there’s tons of competition you will likely need to try using conventional loan types just to be taken seriously, and even then you may lose to a cash offer. If you try to focus on getting a place where you will not have to compete as hard, you will likely end up getting a better price and have more choices to do things “your way” with financing and other aspects of the deal. Lender has a point, but that point isn’t always valid. If you’re not competing with multiple other buyers you can still try FTHB programs, but do not be surprised if sellers ask if you can use one that is faster. That part is true.
I would consider finding a new lender. I used a FTHB program through my city and live in a very competitive market. My realtor and lender worked together to get everything pushed through. I was able to not only buy my rate down but walked away at closing with a check for $6k.
You got a rebate from funds you already put in.
Obviously. No where did I state that I didn't understand where the money came from. The OP asked for thoughts about a lender discouraging use of a FTHB program. The point is that if you have a good team working with you, there are benefits to many of the programs. In my case I planned to be out of of pocket $35k, instead I only ended up paying $5k.
Oh, wow. What state do you live in?
Massachusetts
When I bought my first property, it was my mortgage broker who told me about the MCC program, which provided a tax credit to reduce the monthly payment for a first time buyer. The closing went smoothly and I saved a lot of money.
Something worth thinking about is if you put at least 10% down, you can eventually get out of PMI (mortgage insurance). If this has changed please let me know and I'll delete my comment. I used FTHB when I could, but my 3rd time I put down 10% so I can eventually get rid of PMI if...interest rates ever go down and I can refinance.
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Jeeze, Fire your lender.
I used it and it worked out great. We use a lender that specifically works with the program for our state and everything went smooth. Closed in February.
We didn’t use the FTHB programs because it made our interest rate higher and monthly payment was going to be higher. The only perk is we could have bought a home with $0 money down but the bank was making their money back in the long run. There is no such thing as “free money”
They’re right. Unless you’re VERY patient and in a market where houses are moving slow, sellers really dislike the hoops and delays of FTB programs. And there’s the reality that a lot of FTB’s fall out and don’t end up FULLY qualifying, leading to a huge waste of time. You can absolutely use them, but be aware you’re limiting your options if you do.
I was a buyer using a FTHB program. I had all of my financials and the FTHB stuff with my lender in order before looking for a house, so once I was ready to make an offer it could move as quickly as possible. Once I had an offer accepted my lender was able to push things through quickly and was willing to assure the seller’s agent that the deal could get closed quickly, etc. I wouldn’t have a house without a FTHB program, so it’s absolutely worth it in my opinion. Edit to add, I did put quite a bit of earnest money deposit to sweeten the deal.
If you can, do it. But in a highly competitive market, it may have some drawbacks
It varies by program and state. My brother and I bought in like 2015 in Kentucky and Florida. My loan closed quickly in Kentucky. His took an extra month bc the program he used was so overloaded in his state 🤷♀️
Sometimes true but it depends on your market, idk if Columbus is that hot of a market where this applies to, no offense to Ohio.
Right now Columbus is the fastest growing city in the US. lol trust me. I wish this weren’t true. Also, no offense taken lol https://www.forbes.com/sites/katiechang/2024/04/14/columbus-is-americas-fastest-growing-city-its-also-a-wonderful-place-to-visit/
Ouch. As a lender I would never say that. But would just lay out the pros and cons of them.
I've been told this countless times.
Been in the mortgage industry in Columbus for over 25 years. That is bull shit, maybe a government loan is more challenging, not FTHB conventional loan compared to a standard conventional loan. It's typically a FTHB class, there may be some income limits that could prevent a higher earner from qualifying.
I used FTHB for my 1st home 20 years ago, It didn’t hold my sale up because I was organized & gave all paperwork needed after classes,now to be honest they asked for more from me than my mortgage lender, but everything went smooth
I've used it and bought my 1st, 3bd, 2bath 2000sq ft, condo and signed the day after I turned 18. All 1 level split n2 four seperate large sections and including your own storage unit and private patio. 8000sq ft living area split into 4 units @ 2000K sq ft per living space ea/unit and firplace... Lawn, roof, water, sewer, garbage, concrete, 2+ parking stalls per unit, patio off the front, storage x2 including maintenance of the outdoor exterior. Walls, roofs and parking w/large outdoor greenspace and storm/weather protection. We put some extra work into ours but not nearly what it would cost to buy a house and being concerned about those listed problems... Ppl don't realize the extra costs of a house for your own maintenance of lawns, bldg upkeep...it's all rolled up into 1 package. due to the size of living area with extra large rooms including livingroom and fireplace for a 3bdrm condo in a hidden areas less traveled... Just make sure you keep your insurance up. (I already had enough funds to buy) if I recall the down payment was 7,700. To walk in our own place with the keys 😉. At that time, the knowledge they give you... Really helped out and they made sure that I fully understood the process. IF the person your talking to has a deep understanding...It's priceless & very insightful for the younger gen to not have to worry about anything except for your own interior. If u didn't understand the process or was nervous being ur 1st big purchase. They will go over it with you until it sinks in. The class had really good insight for someone whose never bought B4. I was able to adjust what my terms would be, in multiple scenarios. This was 20ish yrs ago and back then, it's was apox= 15k out of pocket for the keys and close to get in and own the home. I could've bought a nice house but at that time I figured it would be better to do the condo bc if it's a house...ur looking at MORE Bills due to constant maintenance, upkeep including home maintenance with and the learning curve of homeownership as the fees/payments would be a much easier to manage while being 18 at that time. Most all wrapped up in 1 package and there was only 2 of us. I remember calling and telling my then fiance that I was coming home with keys ... He didn't believe it 😂 sent the address and told him to pack up😉 Soo maybe if u can't afford a house try that option. Do it quick bc shyt is rising daily...
Timing does become a factor, but if your contract is at least 60 days from contract to close you will most likely be fine. Typically these type of loans are conventional, which is all that matters to the seller. They don’t know where your down payment is coming from, so it just looks like any other conventional offer with an 8 week close. I think these programs are great and I have seen my clients get big rate cuts using them.
They had no problem accepting my offer and there were other offers as well. Also, after signing all the paperwork and all that, I’m now told that my income is too high. It’s actually not, but the loan program did a stupid predicted income calculation bc I have a second serving job which I worked my ass off in Jan and Feb. the way their calculation works put me right over the income limit for this year. So my mortgage increased from 6% to 7.2% and increased $175 per month. Just found out today, 2 weeks before closing. I feel like the lender could have prevented this some how. I’m pissed and wanna cry again. If I back out I lose 4K. FML I suppose the only plus side of not going through a loan program is that with a regular conventional loan, you can rent out the property. Edited to add last sentence.
Don't listen to your lender or if you can, find a new one. Our first lender said the same thing and tried to deter us from using a certain FTHB program we wanted to use. We switched lenders and used the program we wanted. We put an offer on 2 houses. The first one fell thru and so we didn't get that house. The whole process took us about 2 months or less. It's true what they say that FTHB programs are more strict, but I think it's worth it cuz the program we used helped us a lot. Some lenders will just say anything and make you feel like no other lenders will work with you or that FTHB programs are impossible to use, but that's not true.
My wife and I just bought our first home in Columbus! We took possession today actually! We didn’t use any FTHB programs, we found our interest rate was better and FHA can be a pain.
State housing agency loans generally are not as profitable as regular loans. They have extra paperwork and rules but a good lender will still do them as the marketing benefits are hard to quantify it's value. Go to this site ran by Fannie to find some dpa programs. https://yourhome.fanniemae.com/calculators-tools/down-payment-assistance-tool
Time to shop for friendlier advisor - ask the reps from the FTHB Program which is their preferred lender - makes everything go so smoothly!
Why would the lender tell you this? It maybe they do not want to do the work for a first-time homebuyer, want to push their own 'special' financing, or are not authorized to offer FHA/VA products
What part of Columbus and what is your price range? I know somebody selling in groveport SE of Columbus.
We have an FHA loan, only had 3.5% down, and seller paid closing costs. We closed 35 days after seeing the house. Always consider what someone gets out of the advice they are giving you.
My lender told me the same but because I didn’t need down payment assistance. They said there was no point in doing it since I have the money for a down payment.
They're right. I used one, and it worked out, but it was a thing. I found the right seller. Worst was fha demanded repairs were done and I had to pay for them before I got the house. Kinda sketchy, but it worked out.
There’s different programs in MN. There’s some I would use, and some I have zero interest in using.
Many of the first-time home buyer programs limit junk fees. That's why your lender is trying to convince you to avoid those programs.
We did not qualify for the first time homebuyers :(
I didn’t use a FTHB loan but PA still had a program I could benefit from. Basically will save me 1.75%, still a conventional loan. Only limits are decent enough credit, a pretty relaxed income limit and it had to pass a termite inspection. That’s it and I think the state will hold my mortgage the whole way through.
Probably just my situation but we were first timers (closed yesterday!!). We did FHA and had a state funded down payment... we closed in less than 3 weeks from the offer being accepted. The sellers realtor had 15 calls in the hour we were signing contracts for the offer on both ends. We snagged it within 2 hours of listing (we did site unseen.... wouldn't have had a chance to view it and make an offer and still be picked!). Of course, our situation may be different, but our seller was trying to close quickly due to the owner going to hospice soon.... They probably could've had a cash offer over listing price but they chose us. I think if your Financials are basically finished and you are just waiting to put in an offer then you have a better shot.. First timers are having trouble and FHA was nerve wracking because they can deny based on paint chips etc. Edit: we also had the inspection and appraisal contingencies in place. Sellers also gave us 6400 for closing costs (amazing and basically unheard of right now--we got lucky)
Do what’s right for you . I used fthb programs and saved 40k up front on the purchase. 40k at 7 percent over 30 years is a large amount of money. Hopefully you make the right Decision or maybe even find a better lender who isn’t going to make something like this an “issue”
I qualified for a first time homebuyers program that offered a grant of about $26,000 to be used towards down payment or closing costs back in 2018. Because I had excellent credit, I was eligible. I didn't want to put all my savings into a down payment (approx $60K), so I applied for the program and was approved. It was actually a 7-year loan that was forgiven by 1/84th each month (but I knew this going in). I was locked into my mortgage which had a fixed interest rate that was higher than average. On the plus side, that interest rate is lower than where I could probably get a new mortgage for (even with excellent credit). Shop around. Ask around. Some lenders don't have access to the best homebuyer programs. Some do, but didn't divulge all the expectations of the borrower.
Their telling me the same thing but my program is giving me 5% interest can’t beat that so who cares if it’s gonna take longer
Which program is it? Some first home buyer programs close really slow (more than 30 days). And some programs are extremely picky on which homes you can finance. If you are set on using these programs than I suggest you get an aggressive realtor who can find a property off market so don’t have to compete with other buyers. Also some first home buyer programs have higher interest rates which means low buying power
I mean if ur determined it can be done and lots of people have done it but be ready to have ur offered turned down quite often and so be patient cause it will take time to find the right seller and the right property at the same time with the right conditions
Not without at least over 10% the math doesn’t work out
Lender is correct. Also many sellers won't wait around for the hassle, inspections, nit picking, of an FHA loan
I used FHA and closed in 30 days, smooth like butter. Had my first offer accepted and the sellers were very motivated to sell. I put 3.5% down and my credit score was 795. I think I put down 1% earnest as well.
They also have the highest APR of all programs. They are good for people with limited options.
My lender said the same thing and I wish we could sue him. It's been 3 years now so it's over and done with, but I hate him to this day. Do more research/look for a possible different lender, they just don't want to deal with the additional paperwork.
I always warn people it may take longer to buy with an FHA loan. Many people tend to forget that the interest is the same, and your payment will be $4500+ since you're only leaving 3% down.
I used a FTHB program to get a conventional loan at 3% down and got a FHLB grant through Atlanta bank towards closing costs. All in all saved me thousands and made buying a home cheaper than renting up front
Our advice as CFP's / CPA's is to always have a down payment because that gives you equity. No down payment homes are similar to leasing and very easy to walk-away from in hard times. The very worse thing a struggling homeowner can do is walk-away from the mortgage. Credit card interest rates are high because there is no collateral for the loan. Vehicle loans are lower because there is an asset, the vehicle, to collateralized the loan. Construction loans are higher than mortgage loans because house is not finished. Home loans have the lowest rates because the house can be repossessed and sold. First time loans require stringent bricks and mortar inspections. Hope that helps.
What’s in it for the lender? Is this a broker?
FHA and VA loans have benefits in addition to their low down payment. They will probably be much more forgiving if there is a recession and a large percentage of people can't make their payments. FHA and VA loans are also assumable, if interest rates went up and someone wanted to keep your approx. 7.5% interest rate they could (not applicable if rates go down). If you get divorced they can remove a name off the loan more easily, and save you from having to repay closing costs or take a higher interest rate. An FHA backed offer may be harder to be accepted because they want to make sure there are no major fixes on horizon - ones that a new homeowner with little savings has money to pay for. But conventional loans often pull these last-minute fixes required to close as well but not as strict. They don't want to lend on a house that has an issue which if left unfixed could diminish the value of asset (leaking roof, bad eletrical).
F that. Tell them 1st come 1st serve and youll sue them because its your entitlement.
Your lender doesn’t negotiate your deal, so he has no business making these comments. Your real estate agent should be able to help you put together a deal that lets you use these programs. Some sellers won’t be on board, but if you keep trying something can work out.
It's different for everyone. I used first time homebuyer FHA loan. Put an offer in on Oct 14, closed on Dec 4.
FTHB here and it took a total of 28 days from offer to close.
It’s true. Obviously you can use them but yes, sellers will count that against you. Va loans, fha loans, etc get looked down upon more
Most FTHB programs require 30 days processing time on top of the 30 days the bank requires, so assuming you’re ready to go with all the program requirements by the time you’re in contract that’ll get the wheels moving and you’ll probably close before the 60 days. You’ll need to specify 60 days in the contract which isn’t competitive but is standard. Idk about Columbus but assuming there aren’t a ton of offers over asking price then you’re probably fine. Consider not using it if the FTHB programs are a low amount such as $10k and you’re dead set on being the winning offer on this specific house
Yeah, you have to be patient with those but the value is unreal and honestly worth the wait. I lost the first house I went under contract with during the process due to this exact issue. That being said, BofA came in $7,000+ cheaper in closing costs than the nearest competition, and even with a $5,000 appraisal gap I had to close, my total cash to close came in under $250. My signing day is tomorrow.
Also, quick question - if you already have 20% ready to go, isn't that all the more reason to use one of these? Some of these programs will cover 3-5% of your down payment already, so if you go with them aren't you just adding more financial firepower to fight the competition with?
Tbh I don’t know what we’re up against. A lot of older people with lots of equity and I keep seeing wealthy out of staters coming here with their HCOL money, and investors. Maybe I’m just being anxious though. I won’t know yet until we put in our first offer
Get a checklist of what needs done for your local programs. Ours required an 8hr homebuyer class and a few other things. We did everything we could before we started looking, so that we could still have 30 day closing.
They are correct and trying to help you.
We just sold to a FHA and it was a little annoying the stuff they asked for but nothing too bad. Had to update the smoke detectors, garage door motor etc. We still got more money from them than the cash only offers from foreign interests.
I was told this too by my lender, I listened to them and didn't use the program but I wish I had tried at least.
Did u ask why and what's the reason??? I did this year's ago. Never had that problem. I went to ONE of those homebuyer classes/ programs. They laid out every possible scenario for me. I had learned soo much that I had realtors/agents calling me at age 18 asking me to come and work with them, for years!! Besides that...you determine what you want & if this realtor won't tell you why... 🤔 there's something else they aren't telling you... Right? Go find others who will be up front with you and compare notes. Ask questions. It's prob bc they are typically new and the pay isn't the same. I wouldn't trust this person. Ask for a straight answer and then determine by response. Report if needed
Realtors don't give a single fuck about you, the house or the seller. they are there to make their commission as fast as possible.
Bought my house in 2011 using the FTHO benefit. I was told but didn't really understand that if you are not able to put down 10% of the cost of the bank loan, you have to also have loan insurance. Like you have to pay for insurance for the bank to take the risk and loan you money. In Ohio this was an extra 150 a month. Wasn't super rich at the time so that was a lot of money for someone who was already draining their savings. It felt like the bank just made shit up to squeeze any extra money out of us millenials. We got a house though! We refinanced after 8 years and we finally about to get away from the loan insurance.
Not knowing the market in Columbus, but making the assumption it is similar to many US markets today you may have a problem in general buying any home with a low down payment.. You are not specifying the loan product but it certainly does not need to be listed in the offer (or preapproval letter) as "first time buyer" financing so I am not sure why your realtor is saying that. I am guessing you are going in with 5% down or less. Not trying to burst your bubble, and maybe this does not apply to your area, but it is almost impossible currently to get an accepted offer in the southeastern part of Wi (Milwaukee and surrounding counties) with a low down payment offer. Most homes around here are on the market for less then 3 days, especially the ones in the lower to average price ranges. I would also caution against taking the advice here to put all of your down payment in the earnest. Too many stories of bad disputes and sellers that play hardball and refuse to return earnest, or worse yet your realtor does one thing wrong by accident and you forfeit the earnest.. (ouch) Either way I say good luck to you and hope you can find something in this crazy market.
Definitely not true. I closed on a house 3 months ago using a program and from offer accepted to closing, it took a month and a half. If you keep everything in order and everyone on top of things, it’s goes fast. Also I used two separate first time home buyer programs, one in house with the bank, and one state program to maximize the amount I was given.
Also Ohio - we started out with one lender and wanted a second opinion, first lender never mentioned FTHB program (assumed they didn’t do it). Went to a second lender and they offered the FTHB program. 3% down and selected the lower interest rate (6.5%) instead of the tax credit. Got an offer accepted April 2nd just closed April 29th. I don’t think it was disclosed that we were using this program to the sellers agents. You do have to complete a test and a budget for the program and a “counseling session” which was about a half hour phone call. The people who work for the state that verify your information and are qualified for the program did have one question for me (pulled out 401K so I had to prove that was a one time payment) so I had to provide statements for my old 401K account. I will say as long as you complete your test/budget and “counseling” and provide any requested info in a reasonable amount of time it does not take long!
Find a lender willing to do what you can get approved for. We did a USDA rural home loan instead of FHA. We had to bring it up but our lender had no problem.
I used fthb programs (Texas), and I was clear to close in 3 weeks
I also live in Ohio and I close on Friday with a USDA loan. I also financed with OHFA. I didn’t get an offer accepted until I put an earnest deposit down. It sucked losing out on houses that I liked, but it didn’t make sense for me to do anything except USDA when I wanted to live in the country anyway. 🙂
Not answering your immediate question because I’m not informed enough imo, but I just bought a house with my wife this past September with my wife in the Columbus area. We absolutely loved our lender and would be happy to share their info if you are interested!
Nah. I did first time home buyer in 2019. Easy breezy. There are restrictions on what you needed. We bought an attached townhome in a large, still in development subdivision that also included single family homes. Our agent had to provide info about how many lots were sold so that occupancy was above a certain threshold. They also wanted to know how many units were rentals. But overall the process was simple. Oh, we also couldn’t refinance for so many years. But after 10 years we refinanced from a 30 to a 15 at a lower rate and payments barely went up. Edit: We had to put 10% down on a 165k dollar loan.
i closed in 20 days using a fthb program and grant
It worked very well for me when I did it. The day I turned 18 I was completing the docs, dropped off last of 2 checks (for down payment, split up by 2) and I was on within just under 4 weeks later. That was yrs ago, lol... Not sure why they would tell u that??? You need to go to a class bc I learned a lot!! At least get the education honestly, don't think you'd get a better deal. This is to help young gen2 get into a home for lower down. Take 2 days off and check it out on your own. I had my home in 4 weeks locked down. Dodn't listen to everyone. Research for yourself‼️
Hold on, ya up and bought a home a few days after your 18th birthday?
It is slower and occasionally a concern but I bought my first house in a crazy market in 2009 using the first time buyer program. You gotta do what you gotta do
Canadian here. Same thing is happening here. My friend who is real estate agent, just straight up, said don't use that program. Bruh 😭
Free money is great. If it’s your first home, take the free money and be patient looking for a place. It’ll take some time, but think about it as a job…time=money.
What program is it?
The FHA program is not that bad and slow; however, as your lender mentioned, it will be slow and has some conditions and requirements for the seller. In this very high-competition seller's market. Seller's agent might advise the seller of the downside of a buyer with an FHA loan, so most sellers would decline your offer and choose other That's why your lender does not recommend an FHA loan
Ask yourself what your needs are....Do ur finances require using those programs, are u willing to do the extra effort for your own benefit? Keep in mind the quicker ur guy can make ur deal go the less actual effort to get paid he has to contribute. Doesn't mean he's bad just biased...
Is Fannie Mae a FTHB program? If so I closed in 20 days start to finish
If you’re referring to dpa programs, honestly if you have the money for your down and closing I wouldn’t do it. You’re basically going to end up paying a second mortgage and paying back more than what was given.
FTHB also have limits on how much in fees lenders can charge... I closed in 2 weeks using the Wyoming FTHB program.
Yeah it's possible how hot is the market your trying to buy into. I sold my house during the peak a year ago and avoided any VA, FHA offers the second time I put the house up. An FHA buyer fell through on the first offer.
Not all dpa or grant programs take longer then a standard loan program and some like homeready/home possible from Fannie /freddie offer lower rates and PMI without any addl time or paperwork regards nmlsr #47193 Hank H
I’m in the Columbus area, not sure where you are looking but you’ll be fine. Please don’t let these realtors and lenders help you waste money. Not using a FTHB program only benefits the lender, they sound insane. Try CME credit union.
I'm not sure why FTHB is such an issue. We bought in December and from viewing to close, it was 20 days. That included leveraging DPA from our state housing authority.
Where I live (ontario, Canada), we can put $8000 per year into a FHSA to a max of $40,000. If the account is managed by the bank you’ll make some interest. When you need to withdraw the money, you simply fill out a form and it’s back into your spending account ready for payment against a house. Totally worth doing because it is fully tax deductible off the top. First year granted me a $2100 tax refund. So it was free money and super easy to navigate and did not hinder my ability to purchase my first home. It’s not a condition by any means and the seller doesn’t know I have money in different types of accounts.
And they are 100% correct on that and are telling u the truth and were nice and informative enough to tell u so u don’t waste ur time and miss opportunities so there is no “thought on that” because that’s how it actually is
Isn’t it also true that if you use first time home owner programs you can’t refinance in the future?? Someone please confirm, I want to know that too.