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By Eleanor Thorne 3 Comments
There are MANY No Money Down Home Loans available to buyers in North Carolina. This No Money Down Home Loan information is accurate as of today. If you get No Money Down Home Loan Information somewhere else, it may be inaccurate or out-of-date.
What ARE the No Money Down Home Loan Programs?
The No Money Down Home Loans are special mortgage products, reserved for prospective homeowners who qualify based upon some income, job and asset requirements. Home Buyers who would otherwise qualify for a conventional mortgages via Fannie Mae or Freddie can’t use some of these programs. No Money Down Home Loans are the cheapest, simplest way for NC Home Buyers to finance their new mortgages.
The No Money Down Home Loans have a common defining characteristic, in that you can not exceed the common “Median Income” for the area you are interested in. The programs do require home appraisals, and in some cases the property must “fit” within the No Money Down Home Loan Program footprint.
The No Money Down Home Loan Programs we offer are NOT limited to First Time Home Buyers, however, for some of the programs you can not currently own a home, and for other mortgages there are restrictions based upon how recently you owned a home.
No Money Down Home Loan Programs : USDA Requirements, FHA Guidelines and Veteran Home Loan Benefits
Another big plus is for No Money Down Home Loan Programs is that they are fairly easy for which to qualify for!
USDA No Money Down Home Loans:
USDA offers No Money Down Home Loans in every county in NC. The USDA Home Loan Requirements are pretty basic and include the following:
- If you currently own a home, you will need to have proof that you can not commute due to a job change. If you are going to rent out your current residence, you will need enough income to qualify for both payments without counting rental income (if it has not been previously rented) If there is at least a 12 months of history of collecting rent for the property, this No Money Down Home Loan program will allow you to count the income to qualify.
- The home must be located within the USDA Home Loan footprint (Every County in NC currently has areas that qualify, although this could change as of September 30, 2013 – View USDA Eligibility Map Changes slated for NC).
- Each borrower needs at least 2 credit scores of at least 640. There are exceptions, and if you qualify for a NC Housing Finance Agency loan, you might qualify with scores as low as 620. In general, the underwriters for USDA Home Loans in NC are looking for 12 months of Clean Credit.
- You must be under the Maximum Income Requirements for the County you are purchasing a home in to qualify for this No Money Down Home Loan Program.
USDA No Money Down Home Loans do carry a form of PMI. USDA Home Loans carry an “upfront” PMI rate (called a Guarantee Rate) of 2%. This means that if you want to borrow $100,000 – your USDA Home Loan will be $102,000 so that it includes the PMI. That’s the amount you will calculate the payments on. They also charge a monthly PMI fee of .4%.
This means that if you purchase a $100,000 house, with a $102,000 loan on it, you will pay a MONTHLY Insurance fee of $25.50 ($102,000 x .4% = $408 divided by 12 months = $34 a month) These USDA No Money Down Home Loan PMI fees are MUCH lower than the FHA Program!
FHA No Money Down Home Loans:
To understand why the FHA No Money Down Home Loan is a smart program for the FHA, we have to remember that the FHA’s chief role is to insure mortgages — not “make” them. They offer these options in an effort to help as many people as possible qualify for today’s low mortgage rates!
- You can get a GIFT for the FHA 3.5% down payment from a Family Member. This is especially useful for families where one person has good credit, and another person has the cash to help with the down payment. You can also “borrow” the down payment (in essence) from the Bank of Mom and Dad!
- You can add a Non-Occupying Co-Borrower to the Loan and they can make the 3.5% FHA down payment. This is an especially attractive program for students who are recently out of college, and for as a Single Mom Mortgage Program when you want to find No Money Down Home Loans.
- If you are a Teacher, Firefighter, Police orEmergencyEarlyResponder you might be interested in purchasing a foreclosed home with the “ALMOST” No Money Down Home Loans of $100. This is only appropriate for those who are interested in living in a distressed area, but this is a great program offered by FHA.
- If you qualify for the NC Housing Finance Agency No Money Down Home Loans program, you can get up to 3%in a grant. You will need to provide at least $1000 into the transaction, so it’s not TECHNICALLY NO money down, but it’s close!
- You will need at least 2 credit scores over 640 for these programs, if you qualify for NC Housing Finance Agency funds, they also require a minimum credit score of 640.
- There are no restrictions about WHERE the property can be located, however NC Housing and FHA both have Maximum Sales Price restrictions for No Money Down Home Loans, based upon the county you purchase a home in.
FHA PMI rates 2013 recently changed. If you are putting the minimum down on a home, with FHA financing, you will pay an upfront PMI rate of 1.75%. So, again, if your mortgage is $100,000 – with the FHA PMI, the loan amount that payments get calculated on is $101,750. In addition to the Upfront fee, there’s an annual fee that is charged on a monthly basis.
To calculate this premium, based upon our original loan that’s now $101,750 – you would multiply that amount by 1.30% (if you made less than a 5% down payment), and then divide that by 12 to come up with your monthly payment for FHA PMI. ($101,750 x 1.30% = $1322.75 / Divide $1322.85 by 12 = $110.23 per month in FHA PMI).
You can pretty quickly see why I said the USDA No Money Home Loans at $34 per month for PMI are much cheaper than their FHA counterpart with $110.23 per month! If you make less than a 10% down payment, FHA PMI will stay on the loan for as long as you have the mortgage.
Veteran No Money Down Home Loans:
If you or your spouse are a Veteran that qualifies, you can use your No Money Down Home Loans benefits to buy your house in North Carolina! Some restrictions do apply:
- Although the VA does not make these No Money Down Home Loans, they do insure them. The VA does not have a minimum credit score requirements, however, the banks who are loaning money for this program do enforce minimum standards for applicants. Unless you qualify for NC Housing Finance Agency Funds, you will need at least 2 credit scores over 640.
- The property needs to be used as your primary residence, and you must occupy the property within 60 days of closing. Of course, if you are on Active Duty, you will simply state that you intend to Occupy the property. If you need to use your benefits for anadditional(or second home) there are special considerations from the Veteran No Money Down Home Loans Programthat as well. For those retiring from the Military, there are Veteran Home Loan expectations about occupancy in that situation as well.
- There are no restrictions regarding where the property can be located, and the maximum 100% no money down home loan is available up to $417,000.
The Veteran Home Loan program also has a Guarantee Fee, or PMI charged upfront. The rate for that is based upon previous use of your VA Eligibility. ForVeteran’s that are first-time users of their entitlement and who are on active duty or honorably discharged, the rate is 1.4%. There are other rates, but there are no monthly charges for PMI like there are for other No Money Down Home Loans.
Conventional No Money Down Home Loan Programs: Fannie Mae Also Offers Help for NC Home Buyers
Fannie Mae offers a 97% program, and they allow the 3% down payment to be a GIFT. Because this program has fairly easy appraisal process, and they do not require that the property be located in a particular Geographic Location – this is a great program for the right buyer!
Additionally, for the right borrowers, conventional no money down financing to 97% also offers certain advantages over FHA loans. The loans tend to be a bit easier to work through the process and loan costs are generally lower than with FHA loans, which include anupfront mortgage insurance premium (their version of PMI)of 1% of the loan amount, and the monthly mortgage insurance premium of 1.15%.
The “downside” to this conventional no money down home loan (meaning you get a gift for the 3% downpayment), is that those with a “Short” credit history, are not likely to meet the more demanding credit requirements.To qualify, the debt-to-income ratio cannot 41% (meaning 41% of your GROSS before taxable income for the housing payment and all of your other debts) and credit scores must be 740 or higher.
You can also use this program to qualify for the NC Housing Finance Agency No Money down Home Loans Program that includes a 3% Down Payment Assistance grant. It’s important to remember that this No Money Down Home Loans option means that you are “capped” in the purchase price based upon the NC County you are interested in purchasing in.
Pro’s and Con’s Of Using No Money Down Home Loans
There are positives and negatives to all things, and that’s no different when you are considering No Money Down Home Loans. The No Money Down Home Loans and First Time Homebuyer programs offered in 2013 have a “re-capture” feature. This means that while no payments are required for the NC Housing Finance Agency Grant program (for instance) when you go to Sell the home, or Refinance the mortgage – the 3% must be repaid if you don’t live in the home the required period of time!
You also have to live in the home as your primary residence.If you’re going to rent the place out, don’t use the first time home buyer loan. Finally, the home you buy most likely has to meet some physical requirements. It must be in good condition and free from any safety hazards (such as lead-based paint, for example).
There are also general income restrictions for the household, sales price limits, and in some cases, limits on where the location of the property must be!
If you want to learn more about No Money Down Home Loans in NC, please call Steve and Eleanor Thorne 919 649 5058, we know what works in North Carolina, and we help people here buy there dream homes every single month! We offer Today’s Lowest Mortgage Rates!
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About Eleanor Thorne
I see myself differently than most loan officers in the Cary/Raleigh market. As a rare Cary native, I see myself as an expert on the area, on mortgage industry changes & factors that effect rates! I've lived in Cary since 1968 - and I'm second generation "mortgage." I work with my husband, Steve Thorne Mortgage Loan Originator #60596 Equal Housing Lender
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Comments
Eleanor saysFHA “Technically” doesn’t have a no money down home loan program – however, the down payment can be a gift or a grant –
- Eleanor says
Without knowing what your credit is, that’s hard to answer… but yes, there are grant programs available for first time homebuyers in NC. For those – you don’t really even have to be a first time home buyer, you can not have owned a home as a primary residence in the past 3 years. USDA might also be a good no money down home loan program to look at? Call us!
- Sarah says
So, if I am a single mom, and I’ve never owned a home – would I qualify for a grant to buy a house after my lease is up? How long does it take?
