Is there really any free money? Probably not. Someone, somewhere is going to have to earn that money in order to give it away. And there is always a catch. But this is the best thing I have heard in a long time! The state of Kansas is making 6 million dollars available in a revolving fund for a First Time Home Buyer 4% down payment assistance program. As with anything, there are some good things and one not fabulous thing that a buyer is going to have to consider when they think about using this program.
Jerry Kolich giving a visual to the Kansas Down Payment Assistance ProgramFirst, the Kansas Down Payment Assistance Program will work with any government loan, such as an FHA, or USDA Rural Development or VA loan. The buyer can use any of them.
Second, the purchase price limit for the Kansas Down payment Assistance Program is $250,200 for "non-targeted" areas (most properties are going to be in the non-targeted areas.)
Third, there are income limits for the Kansas Down Payment Assistance Program and they vary depending upon the number of wage earners over 18 there are in the household. (Call me if you are interested at 913-208-2873)
Fourth, this is a TRUE GRANT of 4% that can be used for either down payment or closing costs! If the funds are used for closing costs and there is extra, it must be used for down payment or principle reduction. There is no recapture tax if the property is sold within a certain amount of time. No prepayment penalty. None. Really.
In order to qualify for the Kansas Down Payment Assistance Program, a borrower must have a minimum credit score of 640, cannot have owned a home in the past 3 years (which is the definition of a first time home buyer, which means some of you who had short sales or foreclosures!), have a debt to income ratio of 45% or less. (Call me for more information on your DTI or to see what your credit score is. I work with lenders who have gone through the training for this program ready to help.)
The only negative that I can come up with right now is that the interest rate is going to be slightly higher than if you weren't using the Kansas Down Payment Assistance Program. What does that mean? A $100,000 loan at a 4.5% interest rate over 30 years is going to be a principle and interest payment of approximately $507; if the interest rate is, instead, 5%, the same $100,000 loan amount over the same 30 year period, the principle and interest rate is going to be approximately $537. For the $4,000 of "Free Money," the payment will go up $30/month. It would take you 133 and a third months to save $30/month to get to $4,000. That is 11+ years. So, is it really a negative? You have to decide.
To me, this sounds like a great program!
For more information purchasing a home
Call
913-208-2873
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