Purchase a Home With Less Than 1% Down

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
#1
Good Afternoon Community!

I wanted to share a new FHA program in California (now available in Nevada, Arizona and New Mexico) that only requires a 0.5% down payment, no minimum loan amount, and borrowers with a score of 580+ may qualify. This means that the lender will allow a 1st mortgage up to 96.5% of the purchase price, and the piggy back 2nd mortgage will be 3% of the purchase, with the remaining 0.5% provided as a down payment.

The APR currently ranges between 4.25-5.25% (depending on your financial situation) on the 1st mortgage for a 30-year fixed, while the interest rate is approximately 8.25% for the 2nd.


There are several requirements for this new program as borrowers must meet a minimum credit score of 580, have stable income for the last two years and the property must be owner-occupied. This program is currently only available in CA, AZ, NV, and NM and the maximum loan amount allowed is $729,750.

You can read more in our blog here.

After foreclosure or short sale: This is also available after a foreclosure or short sale, but unfortunately you may be required to wait the minimum 3-year waiting period to qualify for an FHA mortgage. Borrowers who lost 20 percent or more in household income for a period of six months prior to the foreclosure, short sale DIL or bankruptcy may be eligible in as little as 12 months.
 
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Jon Maddux

Call 1-800-779-4547
#2
This is a very new program and Evan is 100% right. You can even have a foreclosure or short sale on your credit as long as 3 years or more has passed. Email Evan and get pre-qualified!
 

Jon Maddux

Call 1-800-779-4547
#3
Update on this program... only need 12 months after foreclosure or short sale if you had a 20% or more drop in income that caused the short sale or foreclosure. Also the program has expanded from only CA to AZ, NV and NM. This is a one of a kind program for those of you who don't have a full 3.5% downpayment. Contact Evan Bedard to get started.
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
#4
Thanks for sharing this Jon, this is huge news for anyone looking for a LOW down payment program in AZ, NV or NM!
 
#5
Jon and Evan ............... I have recently established proof of income buying a car with a Credit Union. Do you think if I went with a mortgage with them they would require more proof of income? After buying my car, I went back to them and they refied my truck. Didn't have to do anything except sign for the loan. Going to wait a bit through the holidays and see if I can do it. Never been late on anything.
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
#6
Hey Jeffrey,

Congrats on securing the car purchase! Unfortunately, lending standards for an auto loan are usually much more lenient than a home purchase, you'll likely have to demonstrate a solid two year income history to qualify. But since you just got a loan from them, it never hurts to give it a shot!
 
#7
Hi Evan and Jon! Thanks for always being so diligent in keeping us apprised of "new" programs :)

We've been off the board for a while and just starting to read up on the comings and goings here. Haven't read anything but this so far so forgive me if this has been answered in another thread.

Can we qualify for this if we're 10 months in from a bk7 discharge & still in our defaulted home? I have over 5 years of solid work history but my spouse has had 20% + drop in self-employment income. We've been trying to secure modification since 2009 with 2 different servicers, and just received a denial letter due to "not enough income". The letter of intent expired in early Aug but they halted the foreclosure process due to modification attempt. We've had sale dates in the past but those were cancelled. We're in CA btw. Our credit score in June was around 650. So basically, we do not have a foreclosure or short sale yet but have a bk7 discharge from Nov 2012. We would love to buy rather than rent if possible since the chances of staying in this home looks pretty bleak now. TY for any help!
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
#8
Hello InNeedofHelp,

Thanks for the kind words and I applaud you for not giving up the fight to save your home! The California Homeowner Bill of Rights will automatically delay foreclosure proceedings due to a pending loan modification request. If an NOD has not yet been filed, it could easily be another 6+ months before a Trustees Sale is scheduled.

Unfortunately, the waiting period in your case will not begin until the foreclosure is complete. Although it has almost been 12 months since the Chapter 7 discharge and your husband experienced a 20% drop in earnings, the lender will question the current status of the property and will turn down the request if the loan is in default.

IMO it would be best to continue battling it out with BofA for the modification. If you are ultimately denied for the modification and are forced into foreclosure, you can apply for an FHA loan just 12 months after due to the 20% drop in income. If you have not done so already, I recommend reaching out to Michael from the Loan Mod Help Center and have him review your numbers.

Good luck!
 
#9
Hello InNeedofHelp,

Thanks for the kind words and I applaud you for not giving up the fight to save your home! The California Homeowner Bill of Rights will automatically delay foreclosure proceedings due to a pending loan modification request. If an NOD has not yet been filed, it could easily be another 6+ months before a Trustees Sale is scheduled.

Unfortunately, the waiting period in your case will not begin until the foreclosure is complete. Although it has almost been 12 months since the Chapter 7 discharge and your husband experienced a 20% drop in earnings, the lender will question the current status of the property and will turn down the request if the loan is in default.

IMO it would be best to continue battling it out with BofA for the modification. If you are ultimately denied for the modification and are forced into foreclosure, you can apply for an FHA loan just 12 months after due to the 20% drop in income. If you have not done so already, I recommend reaching out to Michael from the Loan Mod Help Center and have him review your numbers.

Good luck!
Thank you for the commitment you continue to make to help us on this board Evan :)

Thank you also for the "applaud" ;-) that means a lot, esp., because there have been so many times I wanted to just say "forget it! I'm done fighting!". It's tiresome going back n forth. What's that they say about the definition of insanity - "doing the same thing over and over again expecting the same result" (or something like that ... Haha). In other words, I feel insane sometimes for trying to fight for something that seems pointless.

So, are you saying that even if we are able to fight and stay here past the one year mark of our BK7 and the foreclosure does not happen yet, the lender would still turn us down since we've been/continue to be in default?

Our new servicer changed from BofA to RCS. They just sent us a denial for the mod but says we have 30 days to appeal. What's Michael's contact info again? Maybe he can help us with some numbers so we can try and appeal w/in the 30 days. Thanks again!
 
#10
Hello InNeedofHelp,

The California Homeowner Bill of Rights will automatically delay foreclosure proceedings due to a pending loan modification request. If an NOD has not yet been filed, it could easily be another 6+ months before a Trustees Sale is scheduled.

Good luck!
Hi again Evan. So I just double checked. We were actually sent a NOD dated July 1st. That same day, I had spoken to RCS and requested a mod application. It expired 8/3/13. We were working with NACA on a mod prior to talking to RCS. But, apparently RCS didn't document us as starting the mod until 7/22/13. So, do you have an idea as to a timeline for foreclosure? We're guessing 3-4 months. What do you think/know? The denial letter we received re: the mod said we have a 30 day dispute period. So, if we don't dispute it, how long until we should expect a letter re: a sale date? I know the sale date is 21 days from receipt of the letter, right? What if we do dispute it?

TIA for any info you can provide :)
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
#11
Thank you also for the "applaud" ;-) that means a lot, esp., because there have been so many times I wanted to just say "forget it! I'm done fighting!". It's tiresome going back n forth. What's that they say about the definition of insanity - "doing the same thing over and over again expecting the same result" (or something like that ... Haha). In other words, I feel insane sometimes for trying to fight for something that seems pointless.
I realize it has been a long rough battle since you first applied for a modification with BofA, you are doing exactly what needs to be done to have a successful outcome and overcome this obstacle. You are the sane one, a hard working class citizen who is trying to do the right thing and battle an institution that's simply "too big too fail." I think it would be a great idea reaching out to Michael and his team to see if they can assist you with the modification, they charge no upfront fees for their service and have had tremendous success with others here in the community. You can find his contact info and the inputs he will need to properly review your case here: http://www.loansafe.org/forum/loan-...oan-workout-solution-post-your-situation.html

So, are you saying that even if we are able to fight and stay here past the one year mark of our BK7 and the foreclosure does not happen yet, the lender would still turn us down since we've been/continue to be in default?
Unfortunately, this is the case. I'm not aware of any lender that will allow financing if you have a mortgage in default - regardless if the account was discharged in BK nearly a year ago.

But, apparently RCS didn't document us as starting the mod until 7/22/13. So, do you have an idea as to a timeline for foreclosure? We're guessing 3-4 months. What do you think/know? The denial letter we received re: the mod said we have a 30 day dispute period. So, if we don't dispute it, how long until we should expect a letter re: a sale date? I know the sale date is 21 days from receipt of the letter, right? What if we do dispute it?
I recommend you file a complaint against RCS immediately for failing to abide by the CA Homeowner Bill of Rights. They are not allowed to dual track your mortgage (process a modification while continuing with the foreclosure process) until a decision has been made. Find out from NACA the exact date your modification was submitted to ensure it was prior to 7/22 when they officially filed the NOD.
 
#12
Hi Evan,

Thank you for keeping the community informed of new program offerings. I just completed the short sale of my home this past June. Since I did not experience a drop in income, just a change of employment that forced me to commute over 75 miles to work each way (hardship), would I still be required to wait the three years? When we bought our home in 2005, my wife was not put on the loans since she had a BK that was discharged in 2003, so there I am the only one with a short sale showing on my credit. I am fine with waiting things out since I have no confidence in the housing market here in Northern Nevada, but I was just curious after learning about this new program. Thanks!

Tom
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
#13
I just completed the short sale of my home this past June. Since I did not experience a drop in income, just a change of employment that forced me to commute over 75 miles to work each way (hardship), would I still be required to wait the three years? When we bought our home in 2005, my wife was not put on the loans since she had a BK that was discharged in 2003, so there I am the only one with a short sale showing on my credit.
Hello Tom,

Thanks for the kind words and I'm glad to hear you managed to completed the short sale in June! Unfortunately, the new FHA Back to Work program is only available for borrowers who experienced an "economic" hardship prior to completing the short sale, foreclosure, DIL, etc. An economic hardship is being defined as a borrower who lost at least 20 percent or more in income for a minimum period of 6 months before the sale. In your case you'll have to wait a minimum of 3 years to qualify for FHA or 2 years for a conventional loan with 20% down payment.
 
#14
Hi Evan,

Thanks for your information. I figured I would have to wait things out some more, which is not a concern to me. My wife and I love the rental home we are in and have a lease that runs through May of 2015 (negotiated a lower rent for a 2 year lease). We have even toyed with the idea of approaching the owner to purhcase this home at the end of our lease. We will have to wait and see how things work out.

Tom
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
#15
Well it sounds like you have a plan! That was a savvy move to negotiate a lower monthly payment in exchange for a longer lease. If the landlord is interested in selling the property you'll likely be first in line to make the purchase once the waiting period is over.
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
#16

mmohammed

LoanSafe Member
#17
Hello Evan

Thank you for the great information. Loansafe has been a tremendous help to us all. I wanted to run my scenario by you because I am interested in purchasing a home since I have recovered from my bankruptcy. I am interested in the opportunity the FHA program provides. I will try to be to the point.

I was a loan consultant for WaMu until the market went into recession and in 2008, I began to have hardship. That is when my credit first began to be delinquent. At the time I owned two properties. One was short sold Sept 2012. The other was returned to the bank in my bankruptcy. From 2008, when I lost employment, I worked off and on through 2012. I started my business in 2012 as a single member LLC but did not earn any money that year (under 8K). 2013 was when I got my partner and my business began to do well and has continued to do well.

I filed for BK in Oct 2012. It was discharged Jan 2013. The one house I owned at the time of my BK was foreclosed and transferred out of my name as of Jan 2014 and I am off of title. Since the BK, I have purchased a vehicle in Oct 2013 and have 2 revolving credit cards started in Oct 2013. I do have a lot of student loans, that are still currently in deferment (about $250,00). As far as income, I currently own my own business with a partner. I own the business 50% owned LLC that is S Corp taxation. I am an employee of the business and earn a 50K salary that is through payroll with paystubs. I have earned that for the year 2013 and same salary this year. We do also receive additional income from our business through corporate reimbursements and shareholder distribution.

My last credit check score this week through just Equifax was 631. My score will be a little higher if I pay my one credit card balance all the way down as I normally do every month, so I can do that if needed. I am looking to purchase 2, 3, or 4 units (preferably 4) as I think this is the better investment for me right now as I continue to rebuild, rather than just a SFR. I am unmarried with no children, age 31. I live in San Bernardino County, Ontario, CA.

I am interested in the FHA program of 0.5% or 3.5%. Please let me know if you think my profile could be ready to purchase something right away.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
#18
The DPA (Down Payment Assistance) program does have income limits and it sounds like you meet those limits. The income limit for the CHF Platinum program for San Bernardino is 78,315.00/yr.

CalHFA income limits have been increased to 157,000 for 2018 (Updated)


Where the problem is going to lie is that your bankruptcy was discharged in 1/2013 (assuming it was a CH7) and the time period for FHA is 2 years before you can obtain financing. Also when you mentioned that you included a home in the bankruptcy that can also be a potential problem. Sometimes it takes the bank a long time to foreclose and get the deed transferred out of your name. Once the deed is transferred out of your name the time clock will start ticking for a foreclosure seasoning period and with FHA that period of time is 3 years. It looks like that occurred in January 2014 which would make you eligible January 2017

For the student loans, as long as you have proof from the creditor that the payments will be deferred for longer than 12 months we can exclude that debt from your debt to income ratio.

There are portfolio programs that will allow you to purchase that don't look at seasoning periods but require typically around 30% down. Hope this helps.
 
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Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
#20
There are many new programs that have been released including the new MyHome program from CalHFA for California among many other programs for other states. If you'd like to find out more feel free to reach out to me directly.