Effective 10-01-2008: No more seller assisted gift funds programs
Effective 01-01-2009: FHA min down will be 3.5%
Question: What other options do we have??
According to HUD letter 00-28 #4155.1:
- Parents or family can still gift the entire 3.5%
- Parents, believe it or not can literally get the money from any place (pawn shop, credit card, whatever) to gift to their kids.
- Cash on hand up to $3000 (mattress money) can still be used as sourced funds
- You can get a loan against an asset even from the seller and even on the subject property in the form of a seller second mortgage
- You can get a loan against a 401(k)
- You can get a loan against a whole life insurance policy (typically at a 3% rate)
- You can set up a Monthly savings plan: I.e. new payment will be $1500; current rent is $900. Set aside $600 and in 10 mos or so you have your down payment and a profound sense of pride that you did it!
- You can use SWEAT EQUITY: Yes I said it. . . If you are a painter for example and the appraisal calls for repairs, you can do repairs and trade it with seller as your down payment
- You can have sweat equity gifted from a family member
- You can have a gararge sale and take pictures and document deposits for down payment
- Ebay
- Pawn Shops
- Wedding gifts for down payment
Other options:
- Housing Rescue Act of 2008: You can borrow up to 10% of sales price up to a max of $7500 from your 2008 tax refund in the form of a 0% loan from Uncle Sam for your down payment paid back at 0% interest for 15 years at $500 per year.
- CalHFA with ECTP, CHDAP or HICAP for 100% financing (even in declining markets)
- USDA 100% financing in rural areas such as Lincoln, Colfax, Grass Valley, Auburn, Pollock Pines, Wheatland, etc. Great program 100% financing at 6.375% with no points and no PMI.
- CalPERS: 100% financing with 5% down payment collateralized from CalPERS.
- CalSTRS: 97% financing as an 80% first with a 17% second lent from the Teachers pension fund
- VA: Veteran's Administration: 100% financing with No PMI
- + City, County, State, Federal Down Payment Assistance programs
Gang.... there are many ways to buy a home with no down.
What we need is good ol' fashioned back to basics approach.
Sitting down at the kitchen table and formulating a plan to help the buyer get the loan and the realtor earn the commission.
Such a simple goal: Realize it and go for it!
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