More specifically, you'll need a plan to fund the down payment. You do have many options, and you can make the move to your next home. However, you will need to work with a personal loan officer who knows the way and can guide you through the choices. Your next home should be better than your current home, and it will be if you approach it with the right plan. Next Steps in Your Journey
Of those that do, 43% is the typical maximum debt-to-income ratio. This is similar to the ratio a mortgage lender will require. Home price. Many programs will only assist buyers who have their eye on a home selling for about the median local price, or a little more. Occupancy. You probably will need to promise to live in the home for a few to several years. Loans to nonoccupants are riskier, so lenders want to make sure they are pricing the loan correctly. However, intent is the key. If something comes up after a year and you need to move, you will not be required to notify the lender. Also, you can get down payment assistance for small multi-family properties of up to four units if you are going to occupy one of the housing units. Prior homeownership. Most of these programs are limited to first-time homebuyers. However, they often define the term loosely. Even if you've previously owned a home, you may be able to regain first-time buyer status after several years have passed since you last owned one.
Would a Second-Time Homebuyer Qualify for an FHA Loan? Once you get your down payment strategy squared away, it's time to look at home loan options. If you own a home and remain financially qualified, you can use an FHA loan to purchase your next home. Qualifying for an FHA loan mostly depends on your credit score and the condition of the home. It is not tied to your income, need or being a first-time homebuyer. Allow us to repeat that last part: you do not need to be a first-time homebuyer to use an FHA loan. It's a common misconception that an FHA loan is only for first-time homebuyers. Where does this misconception come from? Likely, its confusion with other federal loan programs. For example, a USDA loan does have requirements about income and home location. Also, it could be rooted in the misplaced assumption that because an FHA loan is commonly used by first-time homebuyers, it is only for first-time homebuyers. Again, it's not. You can use an FHA loan to purchase your second, third or fifth home if you continue to qualify.
If I could go back and do it all over? I'd probably put at least 50%, maybe even 100% down towards a home purchase. In some parts of the country, this would be almost impossible. In Michigan? It's not. Realtors and bankers are going to hate me for saying that (ever seen the National Realtor Association "never been a better time to buy" commercial? ), but the bottom line is that the more you save towards a down payment, the sooner you'll be 100% debt free. And the more secure you are from foreclosure and financial hardship. There are always exceptions out there, and local real estate markets might make buying/loan much more appealing than renting. But if you want a general rule, there it is. Oh, but what About the Mortgage Tax Deduction?! Whenever someone talks about deducting mortgage interest on a tax return as a blessing or a reason to buy a home, I cringe. You can't add a mortgage interest deduction on top of a standard tax deduction.
FHA loan: You cannot use an FHA loan to buy an investment property. VA loan: You cannot use a VA loan to buy an investment property. USDA Lloan: You cannot use a USDA loan to buy an investment property.
Down-Payment Gift Rules: FHA Loans The minimum down payment required for an FHA loan is 3. 5% with a 580 credit score. Per the Single Family Housing Policy Handbook, down-payment gifts can come from: Family members Close friends Your employer or labor union Charitable organizations Down-payment assistance programs To qualify as a gift, the money given to you by one of the above sources must not have a repayment requirement. Down-Payment Gift Rules: VA Loans VA loans are designed for veterans and their families to make homebuying affordable. A VA loan doesn't require a down payment. However, you could use gifted funds to put money down on the home's purchase if you want to reduce the amount you have to finance. Down-Payment Gift Rules: USDA Loans Like VA loans, USDA loans don't require a down payment for those who meet certain income qualifications. You could bring gifted down-payment funds to the closing table to reduce the amount you need to finance, though. While USDA and VA loans don't require a down payment, you do have to meet minimum credit-score criteria to qualify.
Down-Payment Gift Letter If you're ready to purchase a home using gifted funds, you'll need a down-payment gift letter. For example, your gift letter for mortgage down payments with conventional loans should include: Your name The name and address of the person making the gift The amount that's being gifted to you The address of the home you're buying The relationship of the person who's making the gift Where the money's coming from (i. e. a checking account, savings account, investment account) A clear explanation that the money is a gift, not a loan (borrowed funds are not allowed for down-payment gifts) The down-payment gift letter should be signed by you and the person or entity making the gift. It should also be dated and include the date that the gift was made to you or will be made if funds haven't been transferred yet. Ask your lender if they have a specific down-payment gift letter template you can use. Other Documentation You Need When documenting a down-payment gift it's important to have a paper trail showing the movement of funds from the donor's account to yours.
Are There FHA Energy Efficiency Programs for Second-Time Homebuyers? There are a number of reasons people decide to move into a second home. More space, more rooms, more bathrooms, better kitchen, the list goes on and on. Increasingly, one of the newer drivers of changing one's address is energy efficiency. More people prefer to live in homes that use less energy and are therefore more affordable to own. Some purchasers also appreciate the environmental benefits of owning an energy-efficient home. Because of the growing interest in energy-efficient homes, The FHA created the FHA Energy Efficient Mortgage or FHA EEM. It offers additional funds above and beyond the loan amount for approved energy-saving features. This program can be used whether you are purchasing your next home, or refinancing your current mortgage. Find Help Developing Your Down Payment Strategy as a Second-Time Homebuyer Moving into your next home is an exciting idea. Turning that idea into reality will take some planning.