Buying home when credit worthy but cash poor

This week we talked with Scott Eaves, Associate Broker with Keller Williams Realty/Atlanta Classic. He’s been selling real estate for six years and today he talks about how to buy a home if you’re credit worthy but cash poor.

Q. 100% financing seems to have disappeared so how can I buy a home if I have little or no cash for a down payment?

A. Your down payment is your collateral on your home loan, ensuring your lender that they will be able to recover their full loan amount if you can’t pay the mortgage. Not having much money for a down payment doesn’t have to keep you out of the home buying market. VA loans are still available for 100% of the purchase price, but for non-veterans, I suggest looking for a loan program with a minimum down payment. For example, FHA loans require only a 3% contribution, and I’ve recently learned that you can buy a HUD home for $100 down.

What about down payment assistance programs?

DeKalb County, the city of Atlanta, Fulton County and other cities and counties have down payment assistance programs which are great for people who intend to be in their home for a while. These programs are generally forgivable if you live in your house for a minimum of five or ten years. If you’re thinking about participating in a program, be sure you understand the repayment rules.

I’ve heard about gift programs. What are they?

Most of the time the lender wants to see that you’ve saved up enough money for your own down payment. Lenders have different policies about this, but some will permit a family member to “gift” a down payment to you. If this is how you’re going to get your down payment, be sure your lender will approve. Because policies vary so much from lender to lender about this and other matters, you might be best served by using the services of a mortgage broker who will shop around for a plan that fits your financial scenario. Talk with your Realtor about all these options.

C. W. Cameron for the AJC