Phil: 0:00

Welcome to the first time home buyers podcast . I wanted to talk today about a specific down payment assistance program that is a three and a half percent fully forgiven after six months program. So let's go ahead and jump in and take a look at this. I want to talk about what is down payment assistance This empowered three and a half percent program. What the qualifications are, the limitations and then what you need to do to get started on it. So let's jump right in. First of all, what is DPA down payment assistance. And really it's just a program and there's thousands of them out there. And it's gonna be a program that's gonna help you with. Becoming a homeowner by helping you financially come up with extra funds for closing costs or for your down payment. Your lowest usually is around three and a half percent for your down payment. And usually anywhere between one, two or 3% for your closing costs. And so finding a program that can help you with that means you don't have to come up with as much money upfront, which is one of the number one barriers to entry to home ownership. So what it really does is a monetary program and it's supposed to help you get into a home by making it easier to get that down payment. Or your closing cost taken care of. Now it can cover all of your down payment part of it. Or your closing costs. You don't have to use all of it in some cases. And so there's lots of different programs and lots of different styles of down payment assistance. There are usually eligibility requirements. a lot of times there are income limits, like I said before credit score minimums. sometimes it's also location based or residency based. Let's go ahead and talk about this particular program and it's the empowered 3.5% program. They also have a 2%. So I'll talk a little bit about both of those, but we've partnered with E P M wholesale here with Patriot Pacific financial, and really try to offer a forgivable government grant. For either two. or three and a half percent, and it can be used towards your down payment. And, or your closing costs. So if you haven't quite gotten enough money to cover all of that, This could make up that difference. This program uses the standard FHA loan requirements and really what that means. Is if you can get approved for an FHA loan. You should be able to get approved for this. It has that 2% or the three and a half percent again, use it for closing costs with the 2% oftentimes, or if you need just that little extra or three and a half percent, and it can take care of your entire down payment. It's forgiven after about six months and the program is eligible in all states, but Washington, Washington has some restrictions on down payment assistance programs So This one doesn't work there. This does also allow a non occupa co-borrower. So what that means is maybe you don't quite have enough income for the home you're looking for, and you want someone to co-sign, but they're not gonna live there. Sometimes this could be like a brother or a sister, something like that. They can use this program with you. Only one person on the loan has to be eligible for the down payment assistant qualifications. So let's talk about qualifications. You only need to qualify for one of these and only the main borrower. If you have a co-borrower, they don't have to also qualify for this. So let's talk about them and then I'll go into a little bit more detail. First is you have to be a first time home Second option. a current retired employment or volunteer non-paid member. Third income restrictions. So that's pretty standard on a lot of these down payment assistance programs. That's one of the optional requirements. Or if you're in an underserved census tract, you do have to have at least a 620 FCO score. If you don't have that, you're not gonna be able to get into this program. And you have to take a home buyer counseling class. That's it. Let's talk about the qualifications in a little bit more detail. The first one is, are you a first time home buyer? And really all that means is that you have not owned a home in the last three As long as you haven't owned a home in the last three years, you can be considered a first time home buyer and you'll be eligible for this program. Doesn't matter about income, things like that. As long as you meet that minimum credit score. You've got the income. And you've got that first time home buyer. You haven't owned a home in three years. You can qualify for this program. The second is what job you've got current or retired employment, volunteer non-paid members. So basically if you've ever been military first responder, an educator, if you've ever been in the medical profession or civil servant, And what's great about this program is it's very open. to different kinds of roles. So you don't have to have been a doctor or a nurse, but if you worked in a daycare center that counts as educator, if you were a CNA that counts as being in the medical profession. And so it makes it a lot easier for you to qualify for this program. The next one, the third option is income. So this is pretty standard. And what they use is 140% of the state or county median income. And so I pulled a couple examples here in Southern California. Riverside county limit would put you at about$122,000 income max. Orange county would be at about 137,000. And that's household income. So total gross income. That's probably a limiting factor for a lot of people to be able to get into a lot of these down payment assistance programs. Most people are gonna qualify under the first time home buyer or under their job profession. The last is underserved census tract, and this is typically someone that's in a low income area or a designated disaster area. And if that's the case, then you're pretty much already qualified into this program and they really want to be able to help you out. It's not as common as the other ones. So there are gonna be some limitations, but they're not that bad. This is very much like your standard FHA limits. Although to start off, it has to be a single family home. It can only be one or two units. You can't have a three or four unit. However, you can do a manufactured home. It has to be either a single wide or a multi wide. It has to be constructed after June 15th, 1976. On a permanent foundation. So 4 33 a certified and it has to be on land that you own. It can't be in like a park or a land, lease. You do have to do 3.5% minimum down payment, which is standard for an F H A loan, but you're allowed to get up to 6% seller concessions. And what we see with this program a lot of times is people will use the three and a half percent down. And as part of the purchase agreement, they get two or 3% concessions from their seller. And that covers their closing costs. It has to be a 30 year term. So pretty standard FHA, 30 years, your debt to income ratio Can go up to 48.99%, which is pretty good. There are no resale restrictions. So you can sell this after that six months and no penalties. Again, it's not eligible in Washington state. You can't combine it with any other down payment assistance program. And you can't use it for anything. That's non f a. And the last thing to note. Just like anything, nothing is free. This does cost a little bit more from your interest rate. Typically your interest rate is going to be about 7.5 or 7.75%. Right now, which is mid April, 2023. We're seeing standard FHA loans in the low to mid 6% range. So this is a little bit higher about a percentage point higher than you would get without the program. And what I did see when I ran some scenarios earlier is on a typical house, like maybe a $300,000, $400,000 house. It's a few hundred dollar difference per month. But the difference also is this could get you into a home. With no down payment money out of pocket. So I hope this helps give you guys a general idea of this program. You can kind of tell it's one of my favorite down payment assistance programs. Not only do I really like it because it's forgiven after six months, the credit requirements are pretty low. You don't have to worry about your income being a restricting factor. But we close these fast three or four weeks and we can typically close them, just like a regular FHA loan. And you don't have to worry about how long is this gonna take this extra government program and all kinds of extra authorizations. They do an amazing job at getting this done. So if you guys have any more questions, head on over to ft hb pros.com. We've got all of our podcast episodes available, articles, newsletters, resources, along with our Facebook group where we've got different lenders and agents all there to help answer your questions. So thank you again for your support. Happy home buying.