Down payment assistance?

Question

Hello guys Juan here Dallas market!

Quick question for all my veteran investors

would you recommend using a down payment assistance program for your first home ?

Any investor/lender/realtors done this before ? What are some pros and cons?

I see bank of American giving a grant of up to 17k that doesn't need to be paid back and was wondering if anyone has ever made this  approach to getting into their first home with plans to eventually rent it (,sfr)

Thanks in advance!

Bruce Lynn · Answer

@Juan Campos   Well it would be a nice thought, but it is very difficult to do in this environment where you want a super strong offer to be competitive.  When there are so many buyers bring cash to closing, or bidding way above asking, or even just lots of cash to normal offer, it is tough.

One exception might be if you are buying a HUD home.  They probably don't care.  Often they give preference to owner occupants so that can help.  Trick is there aren't many HUD foreclosures any more and may not be any in the area you want to live.  For example there are only 17 HUD foreclosures for sale in the entire state of Texas today.

You might also see if any of the housing authorities have programs where you meet the guidelines and they have houses to sell.  I'm thinking Irving and Fort Worth, but there could be others.  I don't want to give you no hope, but when I've spoken with these groups and ask how many people they've helped, it was so few it might not even be worth the effort.  Also the income guidelines almost didn't make sense.....maybe they allow $50,000 for family of two income or less, but house cost was $200,000 so most people can't qualify unless they have cash to contribute....to bring loan amount down.

It's so weird because at one time there were opportunities to use these programs and I begged and begged people to try it.  I think I only had one...and he got something like free $15,000 from Wells Fargo for his 10% down payment and as long as he stayed 5 years it went away on year 5.  Not every day a bank is giving away free money.

Joshua Janus · Answer

I am not a veteran but I would advise using a VA loan! You can get into a 1-4 unit property with 0% down.

Bruce Lynn · Answer

@Juan Campos   You are right, not easy in this market.  Best way is to save up as much cash as you can.  Work like crazy for the next year or two.  Do something on weekends and nights.  Bank as much cash as you can to have a war chest.  You have the goal in mind, so the motivation should be easy.   Of course higher paid work is better, but if you have to drive uber, door dash, deliver pizzas, do instacart, or something in addition to your regular job to get extra cash.  Do that for 2 years and you can probably save up $50,000 or more.   Do everything you can today to save money.  Eat at home, cut out cable, reduce your bills, sell all your extra stuff you don't need on ebay/facebook.  I was surprised the other day on FB I saw a lady make a post for her neighborhood and just said something like I need a job that is 1st shift and pays at least $26/hr...that's what I make now, but working 12hrs a day/6days a week at Frito Lay and I'm tired...just want to work 8hrs in the morning.  I'll bet there were 12 people who gave her ideas on where to work at that rate or higher.   Set a goal of saving $100,000 in the next two years.  Maybe you get there, but if you miss, maybe you end up with $50,000-$60,000 and that will give you a lot of fantastic opportunities to buy.   You can do this.   You also want to do everything you can do to have an excellent credit score...have a great loan officer pull your credit and give you advice about what you can do to have a great score and give you a target of what score you will need to get the best loan.  Sounds like a lot of money and it is, but break it down and that is making about $500/extra a week if both you and your wife do it.  $100/day.

This is not really the market for Subject 2 deals.....typically that works when people can' sell their homes.  So the market is so bad, no one is buying.  Then you might be able to convince someone to let you take over payments.  In this market though everything sells.  No seller needs to take a Subject 2 deal to be able to sell.

I would say if you are buying a home to live in, forget about wholesale too.  Risky for you, maybe tough to get loans on it.  You risk the option fee and many of those homes will need a ton of work.

Juan Campos · Answer

@Bruce Lynn I'm nit a veteran by the way I meant veteran investors as investors who are and have been in the field for a long time, and well I thought with. Dpa you could buy any home that could be purchased with the down payment offer but it really sucks to see how the market is doing, I mean everyone keeps saying find a deal, and what not but how would I get a mortgage on a house that's already owned, unless I did subject 2 or wholesale but even then how would.i go about getting my first home it's kind of stressful.

Joshua Janus · Answer

If you have the funds but struggle to qualify through a conventional lender, a DSCR loan is a great option.

Juan Campos · Answer

@Joshua Janus what about non veteran options ?

Down payment assistance?

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