Many of the young professional home buyers in North Carolina rely on their family to help with a down payment. Recent changes in guidelines mean that we can do 95% loans (only 5% needed for down payment), and all of the down payment can be a gift! This Conventional loan is available in all North Carolina Counties with a maximum loan limit of $417,000!
The new Fannie Mae 5% Down Payment from Gift Funds is available to all owner occupied home buyers – meaning you do NOT have to be a First Time Home Buyer to use this Gift program!
We’ve talked to 15 loan officers in the past week who had not heard about this change… so if you are talking to someone else, they might tell you they can’t do it!
Fannie Mae 5% Down Payment From Gift Funds
The impact of this is huge for New Home Builders in NC. Many new home Communities have houses that are outside of the USDA Home Loan “footprint” and they are over the FHA Loan Limit (because FHA lowered their Loan Limits for NC in January of 2014).
With the Fannie Mae 5% Down Payment coming from Gift Funds, borrowers can gather the monies needed to buy their home from Family. They can also use money from a domestic partner or fiance! There are several items we will need, in order to fully document the transfer of the Gift Funds.
Because the program requires the borrower to have a minimum middle credit score of 720, the mortgage interest rates are Premium Priced, meaning very best pricing available.
There’s also a provision to make this work for folks with middle credit scores down to 620! In another new “twist” we can now accept down payment funds coming from a relative, domestic partner or fiance that’s been living with the borrower for the last year.
If the borrower receives the down payment from a finance, or domestic partner who has lived with the borrower for 12 months or more it is not considered a “gift.” Because these monies are no longer considered a “gift” – we can make loans for borrowers with credit scores down to 620!
This is an important point… the “partner” not have to be on the mortgage loan – we simply need to document that the person will be living with you in the new house, and provide evidence that you’ve lived at the same address for at least 12 months.
This program is not for Investment Property or Second Homes. The new provision is only for Single Family Homes – we can’t do this with Condominiums. Town Homes are considered Single Family Homes (they are just attached) so they work just fine too.
The Maximum Loan amount for all counties in North Carolina is $417,000. PMI is required on this loan, because there’s less than a 20% Down Payment.
New Homes that start at $335,000 in Raleigh (for instance) would be over the maximum FHA Loan Limit, and will require a minimum of 5% down payment. With this new program – all of the down payment funds can come from a relative, and the Seller is allowed to contribute up to 3% towards closing costs and pre-paid items… This pretty much means you need NO CASH of your own to buy a house that is $438,947 (or less)!!
If the Sales Price is less than $240,000 we can offer First Time Home Buyers a Mortgage Tax Credit – which provides up to $162 a month in additional credits for as long as you live in the home.
Ready to buy a New Home in Raleigh or Cary? Call Steve and Eleanor Thorne 919 649 5058 – and have questions or have questions about Fannie Mae 5% Down Payment from Gift Funds? We work with people all the time who have only a little bit of money to put down on a home, or need information about home loans for single parents – and we love to help!