The days of 100% financing are mostly gone, with the exception of those who have VA eligibility or are applying for a USDA loan.
In addition to the down payment, a buyer will be required to pay closing costs and prepaids. Buyers who are getting a VA loan still have closing costs and prepaids. This is the cost of the loan including title fee and government recording fees. These are generally 3-4% of the loan value or a minimum of $2500-$3500. The seller can agree to pay some or all of the buyer’s closing costs up to a certain dollar amount. FHA will allow up to 6% while some conventional loans only allow up to 3%. But remember that the seller can only pay up to the actual amount of closing costs. So if you ask for $6000 in closing costs and only need $4000 in closing costs, you can only get $4000 thereby giving the seller an additional $2000 that could have been negotiated elsewhere.
Today most consumers are turning to FHA when they require a low down payment. The down payment is only 3-1/2%. In Oklahoma we have down payment assistance for those who qualify. Depending on the program this can be $3500-$5000 in grant money or state bond which is 3-1/2%. The down payment assistance alleviates the issue of a buyer having to save the down payment money. But there are income requirements. In addition, if you are getting grant money the property will have to be inspected and have all necessary repairs made prior to closing. You will have to have a minimum investment in the home usually 1% and take a home buyer education class. Both grant money and bond money require the purchaser to remain in the home for a minimum of 5 years or pay back the down payment assistance in a proration.
So while the bank is not offering a lot of possibilities for 100% financing, there are ways to still get into a home of your own with little money out of your pocket. If you have questions regarding down payment assistance or other real estate questions, please call me at 405-213-2992 or visit my website at www.sandiwalker.com