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
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