Finance For As Little As 3% Down

You may be hearing new stories about how tough it is to finance a new home.   It’s simply not true.  You can finance with FHA or Mass Housing with as little as 3% down with a credit score in the low 600’s and a steady, proven income (there are maximum income limits to these programs).

The big differences these days are that you have to prove your income through pay stubs and income tax returns, and that the appraisers are no longer chosen by the lenders so the value can’t be unduly influenced.   Those are improvements in lending practices.

Can You Eliminate PMI

If you can put 20% down, you won’t have to pay mortgage insurance (PMI), which will decrease your payments.  But that’s not necessary for most properties.

Homes In Good Condition & FHA

When looking at financing your Newburyport home keep in mind that single family homes that are in good condition can be financed through Mass Housing or FHA, which will finance with 3 and 3.5% down respectively.   Good condition is key, however – the house has to be livable and reasonably maintained.  Outdated is OK, bad condition is not.   There are rehab loans available through these programs for houses need work but they are a nightmare to deal with, and you can’t do the work yourself.

Condos Need To Be Evaluated

Condos can be trickier.   If you put 20% down, the association is subject to a limited review; anything less, and the condo association is going to be scrutinized.   Budget, management, ownership of other units, these things all come into play.   We understand condo financing if this is what you are looking for so that your time isn’t wasted.   You can buy a condo using FHA with 3.5% down, for example, but the condo needs to be approved for the program.  Some of the bigger complexes are, few duplexes are.  We can connect you with a lender who will handle this for you and take a qualified property through the approval process.

Understand Your Total Costs

Besides your down payment, closing costs and prepays can be substantial, from $4K up, depending on the amount of your purchase.   Prepays are things like insurance and taxes that have to be paid for up to six months in advance.   In most cases we have been able to reduce a Buyer’s cash outlay by adding the closing costs and prepays to the purchase price and including them in the loan.  The home does need to appraise for the higher purchase price for this to work.