Ways to Buy a House When You Don’t Have a Lot Saved Up

Hi, I'm Chad Rankin with the Rankin Mortgage team. And I am here to tell you today that you may very well be able to buy a home with very little money in pocket. Every day, we speak to folks and we help folks buy homes with down payment assistance. Many times, they have been told in the past that they need to have 20% saved up - sometimes told less than that by friends, family, colleagues, real estate agents even.

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But the reality is it's not necessarily true. In fact, many, many times we're actually able to get people into a home with zero down payment. So how can you get down payment assistance to buy a home with very little out of pocket?

I like to go over a few options you have. One of them being FHA with down payment assistance, or mass housing with a couple of down payment assistance programs that they have. They each have their own specific guidelines and requirements. And so I'd like to touch base on some of the most important ones.

You must be a first-time home buyer. That includes anyone that has not owned a home within the last three years. There are minimum FICO credit score requirements, and that varies depending upon the actual program. Our job is to take a look at exactly where you stand, see what program you fit and work in to now. Otherwise, we're going to go ahead and see how we can help you get into that program.

Maximum applicant income, or household income. There are a couple of different programs that have different income limits. For example, in Worcester county, you're looking at $101,200 for an individual applicant income limitation. And there's other programs that are great programs, they just have different ways of income calculation and qualification.

Another key aspect is the mass housing maximum acquisition cost limits. It's just their fancy way of saying maximum purchase price. So that's going to vary by county as well. And, you know, for example, in Worcester county it's just over $346,000, right now. That changes yearly. It doesn't change significantly, but it's key because if you want to purchase a home for more than that dollar amount in that town, you're not going to be able to get the down payment assistance.

Their other program, mass housing conventional, it's not necessarily a first-time home buyer program, but if you are a first-time home buyer, it allows you to utilize that down payment assistance in specific towns called gateway cities. So you can actually still utilize the down payment assistance above and beyond the maximum acquisition costs limit.

Property types: that's another key topic to discuss because single families allow for you to utilize the maximum down payment assistance. So for example, on a $300,000 single family purchase, you can utilize all $15,000 of the down payment assistance.

Whereas on a multifamily, they actually require they follow Fannie Mae, Freddie Mac guidelines that require that two out of that 5% is the maximum that can come from mass housing. So three out of the 5% down payment has to come from you. So there's less down payment assistance available in that case.

There's also a home buyer education class that's required for all first time home buyers, and we'll fill you in more about that later. It's something that only takes a couple of hours and you can do it in the comfort of your home and it's free.

Also, as I mentioned earlier, you have to be a first time home buyer, you also can't be on deed of any other property. And I just mentioned that because that's one that comes up once in a while where somebody is actually on deed to another property, but they never purchased.

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So they think to themselves, well, I am a first time home buyer because I never bought a home. Maybe a family member, a parent put them on deed. Mass housing does not allow for you to purchase a property and be on any other deed.

And a very big one is debt to income ratio, DTI. Now that's very important regardless of what product you're utilizing, whether or not that's a mortgage with down payment assistance or not. At the end of the day, your maximum purchase power, your preapproval, is going to be based off of debt to income ratio. Just different products have different debt to income ratio allowances, and that's something we have a one-on-one conversation about.

As I mentioned earlier, we are so many times with the second lender that somebody will come see, third lender, and we love that. Just like the consumer finance protection bureau states, they advise that you get two or three opinions, they advise three opinions.

The reason behind that is not everybody has the same products. And not all loan officers have the same experience, not all loan officers specialize in the same products. And so that's why we suggest if you have any questions, you seek out the right loan officer and just make sure that they do provide the programs that you're interested in.

Again, this is Chad Rankin with the Rankin mortgage team. If you have any questions at all, please don't hesitate. Reach out to myself or my team. We are here to answer any questions you have.