One of the issues affecting homeownership is the lack of a down payment or closing cost money. It is estimated that 30% of prospective homebuyers with a credit score of 620 or better do not have adequate funds to cover the down payment and/or closing costs.
Pasco County and Pinellas County have Down Payment Assistance Program that are about to receive new funds effective July 2007. How much will they have available we don't know yet. Pinellas county funds will be available in a first come, first served basis (subject to change). Pasco County funds will be available through a lottery and the reservation form and application can only be submitted by an approved lender on behalf of the borrower.
The guidelines to qualify for these funds are very tight. There are income requirements as well as credit screening. Borrowers approved for sub prime loans will not be approved for down payment assistance and fees have to be kept to a minimal. In addition, we have lender guidelines that have to be met and while many times the guidelines form the lenders are more flexible than the prospective counties; you could receive loan approval and not be approved for down payment assistance.
The sub prime woes have made lenders tighten their guidelines further, even on conventional financing. It used to be that using the Down Payment Assistance Programs we could get an approval with an LTV and/or CLTV of 100%.
Today, even when using down payment assistance, lenders are asking for a CLTV of 95%. (CLTV is the combined loan to value; meaning that all financing cannot exceed the CLTV) What this means is that the loan amount plus down payment assistance can not exceed 95% of the purchase price. The borrower still has to provide 5% out of pocket in order to qualify for the loan as per the lender even though the required out of pocket contributions from the counties by the borrowers are much lower. While there are lenders willing to do a CLTV of 100% on first time home buyers, they are far and few in between plus the credit guidelines are tighter.
These programs are an excellent tool to help prospects get into a home that otherwise they would not be able to buy because of the lack of available funds. Pasco County offers what I believe is the best assistance for the two counties; however, Pinellas County has a terrific program if you are buying in the City of Largo.
For more information please contact the Tampa Bay CDC or the Pasco County CDC or I'll be more than glad to answer any questions that you may have.
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