What type of loan programs are offered with the gift?
- Rural Development
- Fannie Mae HFA Preferred
- Freddie Mac HFA Advantage
All loans are 30-year, fixed rate mortgages.
Rate/term refinance on any of the above loan products.
How does DPA work?
The down payment assistance is in the form of a gift and is based on a percentage of the total first mortgage loan amount. Amount of assistance is 3.5% or 5.0% of total first mortgage loan amount.
The funds may be used to fund up to 100% of the Borrower’s cash requirement to close, including the down payment, closing costs, pre-paid items, single or split MI fees and other related Mortgage Loan fees and expenses. No portion of the gift funds can be paid to the Borrower unless the Borrower is being reimbursed for his/her earnest money deposit and pre-paid expenses to the extent the minimum Borrower contribution has been satisfied. Under the rate/term refinance option, any funds above the amount needed to pay the Borrower’s loan related costs must be used to reduce the principal amount of the First Mortgage loan.
Additional Down Payment Assistance Subsidy allowed for Freddie Mac Loans as follows:
- For Very Low-Income Purchases (VLIP), less than 50% AMI, an additional 200 basis points (2%) will be available
- For Low-Income Purchases (LIP), less than 80% AMI, an additional 50 basis points (.5%) will be available
See income guidelines to qualify for subsidy.
Do I have to pay back any portion of the down payment assistance?
No, the borrower is not required to pay back the gift upon sale or refinance, it is a true gift to the borrower.
Am I required to stay in the home for any minimum number of years?
No, you are not required to stay in the home for any period of time. However, we do not allow the program to be used for borrowers wanting to “flip” homes.
What are the first mortgage interest rates?
REI Down Payment Assistance will post First Mortgage interest rates by 9:00 a.m. C.S.T. daily. Please note that as a result of the gift, the interest rate on the first mortgage loan will be higher than a first mortgage loan that does not include the gift.
What is the minimum credit score?
All borrowers MUST have a minimum representative Credit Score of 640 with a maximum DTI of 45%.
What is DTI?
DTI stands for debt-to-income ratio, also referred to as back-end ratio. It shows how much of your gross monthly income is needed to cover all your debt obligations. Follow these steps to determine your approximate DTI:
- Add up all of your debt (including your mortgage, car loans, child support and alimony, credit cards, student loans, etc.)
- Divide this amount by your monthly gross income.
- Then multiply this amount by 100. This percentage is your DTI.
Please keep in mind that you must meet specific underwriting standards. The mortgage lender can help you better understand FICO credit score and maximum back-end ratio requirements, as well as any other standards that may apply.
Do I have to be a first-time homebuyer?
No, there is no first-time home buyer requirement.
Are there income restrictions?
The borrower’s qualifying income must not exceed Program Income Limits. Click these links to view Government Income Limits (FHA, VA, and Rural Development loans) and Conventional Income Limits (Fannie Mae HFA Preferred and Freddie Mac HFA Advantage. The conventional product has substantially higher income limits.
Does the borrower have to take a home buyer education class?
FHA, VA, & Rural Development Loans: Home buyer education is recommended, but not required.
Fannie Mae HFA Preferred and Freddie Mac HFA Advantage: Required if all borrowers are first-time home buyers, at least one borrower must complete pre-purchase home buyer education and counseling. The online course listed below is an acceptable course as is an on-line MI company, and/or an OHEA Certified or HUD certified counselors.
REI has been approved to provide Homebuyer Education through EHome America, please click on the following link to take the online course. The cost is $99.00.
Can the Seller help me pay closing costs?
Government Programs (FHA, VA, & Rural Development):
- Yes, 6% seller concessions are allowed.
Fannie Mae HFA Preferred & Freddie Mac HFA Advantage:
- Yes, 3% Maximum for CLTV Greater than 90%
- 6% maximum of CLTV less than or equal to 90%.
May be used for closing costs and/or single or split MI premiums
What is the difference between closing costs and required down payment?
Closing costs are fees associated with the cost of obtaining a home loan. These fees include items such as the appraisal, lender origination fees, escrow handling charges, wire transfer fees, discount points, lender’s title insurance and prepaid taxes and insurance premiums.
The down payment for a home is applied directly toward lowering your total loan amount. Normally based on a percentage of the total sales price, the amount is established by the agency loan program that the lender has chosen for your loan.
How long does the process take?
Lender’s should be able to close a loan in the same amount of time it takes to close a traditional mortgage loan.
Can I receive a gift for investment property or a second home?
No, the borrower must utilize the gift on their primary residence.