But FHA requires 3.5% down David? Yes – but with this program the lender will finance the 3.5% down as a 2nd mortgage under their Downpayment Assistance Program (DAP). There are some caveats and conditions and. small print of course:
- No debt to income ratio max
- No Income Limits
- 600 Minimum FICO score
- Non-Occupying Co-Borrowers allowed
- No 1st time buyer requirement
- 1-2 Units okay. Owner must occupy one of the units
- Condos okay
- Manufactured Homes okay (No single wide’s)
Details on the 2nd mortgage:
- Can be used for either down payment or closing costs
- Term is for 10 years, repayable and not forgiven. The 2nd mortgage will not subordinate, so no FHA streamline is available
- The 2nd would have to be paid off in full when borrower decides to refinance, but it would be a rate and term refi since this is a purchase money 2nd
- The 2nd mortgage for the 3.50% for down or closing is a closed-end 2nd. It is not a silent 2nd. The buyer needs to qualify with this additional payment
- The rate for the 2nd mortgage is 2% above the 1st mortgage
Still have questions? Great – we love questions!
- Call us at 503.661.5580 or
- Submit a question on our Contact Us page or
- Email me at david@stone-bridge.com