Did someone say no money needed? Yes, no money from the buyer.
There are several non-profit programs out there that allow for some type of assistance to the buyer. Nehemiah is one of the largest non-profit organizations that allows the seller to give money for the down payment and closing costs.
This program is approved by FHA which is part of HUD. Nehemiah can basically get a consumer into their dream home with no money out of pocket. FHA states that you must have 3% of your own money into the deal. And FHA typically asks for 2.25% as your down payment, which is included in the 3% total. This means that you would need to pay an additional 3/4%. But FHA also allows you to receive a 100% gift that can be used for both your down payment and closing costs. This gift can come from either a family member and or a non-profit organization.
Nehemiah allows for the seller to contribute up to 6% of the purchase price which can be applied towards the buyer's down payment and closing costs as mentioned above. They charge a $499 flat fee for this service. This fee can be paid by the seller, buyer, or even the lender. You can also combine that 6% with the seller contributing another 6% as seller contribution.
What takes place is that the seller gives Nehemiah the money which turns around and gives that money to the buyer as a gift. These gift funds can be for first time home buyers and even repeat buyers. There is no income limitations or geographical restrictions. And the best thing is that you don't even have to repay the money, hence the reason why it's called a gift.
Overall, the only thing that needs to happen is to be approved by your lender for the FHA mortgage and for the seller to contribute the funds. And what is great about FHA is that they allow for 6% seller contribution. Another reason on how you can get into your dream home with no money out of your pocket. Between Nehemiah and the seller contribution, you could be in that house with as little as zero money.
Part 2 is going to go into detail on how a FHA mortgage can work for you and for those with less than perfect credit. And I was inspired by Thesa Chambers because of our conversation the other day to write this post.