Money Money Money! … DPA Options TODAY!
As Kamala Harris accepted the presidential nomination this past week, more conversations in real estate circles have focused on her housing plan, much of which sounds like Biden’s Housing Plan four years ago. One of the proposals garnering attention is her $25K down payment assistance (DPA) to first time home buyers who can prove a 2-year positive rental history. Biden’s original plan was to give $25K to first generation buyers with a $10K tax credit for a wider first-time home buyer contingent. Harris is going for direct monetary assistance at the closing table; however, not until housing supply issues are sufficiently addressed. Her plan is to increase the housing supply by 3 million affordable homes by the end of her first term in 2029 by providing subsidies for new construction.
Getting $25K into the hands of your buyers could take a few minutes (if at all). So in the meantime, there are changes TODAY that not only can help your buyer with the down payment, but also closing costs and buyers agent compensation. Let’s go through a few of my favorite as The Rueth Team is breaking down the barriers to home ownership through creativity and solution creation!
– Movement Boost! – This FHA DPA gives 5% to the buyer in the form of a 2nd lien to an FHA 1st. The 1st mortgage is a standard FHA loan with a competitive market interest rate. The 2nd lien is a 10-year fully amortized loan for buyers of a 1-2 unit, with a 620 FICO and a qualifying income <= 160% of the Area Median Income (AMI). Here in Denver that’s $206,640! You read that right! Your buyer can make over $200,000 and get 5% assistance. And this is “qualifying”, meaning I can use just one buyer or strip off the bonuses or commissions. This is HUGE!
– Dream to Own Program – This is a conventional HomeReady 1st lien with a 30-year interest-only 2nd lien of up to 4% of the purchase price to be used towards down payment and closing costs. And the coolest part.. HomeReady interest rates are LOWER than market rates, giving the buyer the same low rate on both the 1st and 2nd, making this program a game changer. The buyer does not need to be a first time home buyer, but qualifying income is limited to 80% AMI. (80% AMI in Denver is $104,320; “qualifying”, not total income).
– CHFA’s $25,000 – you know about CHFA’s incredible grants and 2nd loans; but did you know they have what Harris wants? They already have a first-generation homebuyer program offering a guaranteed $25,000 to use towards down payment and/or closing costs. The first-generation program never runs out of funds and does need to be paired with a CHFA 1st lien. Repayment is deferred until sale or refinance.
– MetroDPA Social Equity Program – MetroDPA just raised its qualifying income limit to $195,600 opening up access to MORE buyers! In addition to their incredible programs they also have $15K and $25K grants for buyers who can demonstrate they reside or are direct descendants of residents in Denver’s redlines neighborhoods between 1938 and 2000. These funds run out every year (ending as soon as March 2024); so early birds really do catch the homebuying worm.
– Lender Credit – Now that rates are going down, lender credit opportunities are getting BIGGER! I can now raise a buyers interest rate giving them 2, 3 or 4% towards closing costs. Powell called it on Friday… “The time has come for policy to adjust” and markets are calling for a 200bp drop by next June. While I believe it will take longer, 2025 will see lower rates, so a buyer’s opportunity to take a higher rate today to get into a home then refinance in 6-12 months is worth a conversation!
This is just 5. I could go on and on and on…but you’d stop reading (you may have anyway) and I know that. So here’s what you do.. call me. That’s it. Simple! Let’s find the money!
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