Fact or Fiction: 1% Down FHA is Back?
July 6th, 2009
Categories:Real Estate News
Believe it or not, it appears the 1% FHA Loans are coming back. Well, more like crawling back.
Last Friday I received a completely random phone call from Robert Spector with The Lending Company. He ran across an post I wrote about 9 months earlier when a private investor offered a 1% down program. The program was immensely successful. However, it didn’t stay on the market long because the investor only had a limited amount of funds to support the program.
It appears The Lending Company is the first lender to have access to a new 1% down program offered by the H.O.M.E. Gift Program. While other lenders say they have similar programs coming, I have yet to find anyone else prepared to write the loan today.
Here are some bullet points about the 1% down FHA program:
- Program provides up to a 2.5% gift to home buyers utilizing an FHA 1st mortgage
- Down payment requirements as low as 1%
- 1% down payment can be gifted from a family member
- Seller can contribute up to 6% for closing costs and prepaids
- Competitive Interest Rates
- Flexible loan approval guidelines
- Not just for first time home buyers
I had some questions for Robert so I decided to post them in a Q&A format.
Question #1:
All the documentation I’m reading on the AZ Home Buyers Solution website regarding the FHA loan seems to be written as though the first loan will be 92%, the second for 5%. Creating a total of 97% LTV. From what I recall FHA is only allowing a 96.5% LTV.
Answer:
While FHA is lending 96.5%, the FHR Is giving the other 2.5% and the purchaser 1%.
Question #2:
Your flyer said the program will gift up to 2.5%, which is more than AZ Home Buyer Solutions is stating.
Answer:
I went on the az home buyer solution website, that is a completely different program that is not used anymore. Family Housing Resources (FHR) has a general program for the public which is not our 1% down. TLC’s program is exclusive, and only accessed by approved loan officers. This is pasted from the website I access..
Arizona Homebuyer Solutions features:
- 2.5% gift to qualified homebuyers utilizing an FHA 1st mortgage
- Down payment requirements as low as 1%
- Flexible or No Income Limits based on loan program and county Click here for income table
- Competitive interest rates
- Flexible loan approval guidelines
- Not a bond loan
- No recapture tax
- Available Statewide in Arizona
Question #3:
If the FHR gift, truly a gift? I’m trying to figure out how FHR is making any profit from this program.
Answer:
FHR is a non-profit 100% designed to help homeowners purchase in this challenging financial times.
Question #4:
What are the current rates?
Answer:
The H.O.M.E. programs rates are .25-.50 higher in rate, due to the riskier nature as the buyer only has a small financial stake in the property. The increase in payment of $50-75 (based on loan amount) is offset by the savings on down payment. We can also use closing costs provided by the seller (up to 6%) to buy the rate down to current market. Usually 1 point equals .50 in rate.
Question #5:
Lastly, what is your contact availability? Do you keep a set structure of hours, or are you available for buyers to call with questions at any time?
Answer:
I am available 24/7 and realistically on the phone from 5:30 am until 9 PM. I will sit at open houses, work with borrowers in person, and provide up to date communication on status. With over 20 years in the business, I understand how important the status updates and walking your borrower from application to close are. At The Lending Company we have in house underwriting, processing, closing and conditions. We do not have to send out for approvals, and can answer all your questions immediately.
Robert’s contact information is available on the flyer or you can send him an email by using the form below.
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Related posts:
- Get 22% off Your Next Home! (seriously)
- Big 3 – Loan Programs
- 4.5% Home Loans Help, Hurt or Just Silly?
- So Many Types of Loans, How Does One Choose?
- Highest Mortgage Rate Jump Since '87
what is the minimum fico score required for the 1% down program?
Hey Laura,
The 1% down program is an FHA loan so you will find most lenders will require a 620 FICO and some of the bigger lenders will require a 640 FICO.
If you are concerned about FICO scores, I have a lender with a unique program that does not look at FICO scores and instead looks at the past 12 months of payment history.
If you would like I am more than happy to provide you with two other lenders who can help you with finding financing in this market.