What type of loan programs are offered with the assistance?
We can provide down payment and closing costs assistance on most first mortgage products offered by your lender, including government loans and conventional loans. Your lender will determine which one is best for you.
- Rural Development
- Fannie Mae HFA Preferred
- Freddie Mac HFA Advantage
All loans are 30-year, fixed rate mortgages.
How does DPA work?
The amount of down payment assistance received is based on a percentage of the total first mortgage loan amount. We can provide up to 5% assistance depending on the first mortgage loan product recommended by your lender. The assistance may be used to fund up to 100% of the borrower’s required down payment and a portion of the closing costs. The borrower cannot get cash back at closing with the exception any upfront expenses that were paid outside of closing such as escrow funds and appraisal fees.
The assistance provided with all government and Freddie Mac HFA Advantage conventional loans is in the form of a gift that does not have to be repaid.
The assistance provided with a Fannie Mae HFA Preferred conventional loan is in the form of a 7-year forgivable second mortgage, which forgives 1/84th of the assistance amount each full month the borrower lives in the property after the loan closes. The borrower can receive 0%, 3.5%, 4.0%, or 5.0% of the total first mortgage loan amount in assistance funds in conjunction with this loan type.
See below for example:
|Loan Type is: FHA (Government Product)||Loan Type is: Fannie Mae HFA Preferred (Conventional Product)|
|Loan Amount is: $100,000||Loan Amount is: $100,000|
|5% Assistance: $5,000 Gift||5% Assistance: $5,000 2nd Mortgage|
|No repayment or liens for the $5,000||2nd mortgage forgiven 1/84th a month over 7 years - no payments unless you sell or refinance within the 7 years.|
Do I have to pay back any portion of the down payment assistance?
REI has two different types of assistance. See below for details regarding each type of assistance:
Gift – the borrower receives a gift where no funds are required to be paid back and no liens are filed against the property.
Forgivable 2nd Mortgage – borrower receives assistance from REI and a forgivable 2nd mortgage is filed as a lien against your property. The 2nd mortgage is forgiven 1/84th a month and totally forgiven if the borrower lives in the home for 7 years. This must be repaid upon sell or refinance or payment in full of the property, or failure to occupy the property as personal residence for more than 60 days if within the 7 year period.
Your lender will help you determine which first mortgage loan product is best for you.
Am I required to stay in the home for any minimum number of years?
That depends on the first mortgage loan product your lender determines is in your best interest. Our gift funds are not tied to a minimum number of years. Our 2nd mortgage funds are forgiven 1/84th a month for a total of 7 years. If you sell or refinance within 7 years, you will be required to pay back the pro-rata share based on how long you have lived in the home.
What are the first mortgage interest rates?
The interest rates for the REI Home100 Program are set daily. For more information about interest rates on a specific day, please contact a participating mortgage lender by visiting our Approved Lender page.
Please note that as a result of the assistance, the interest rate on the first mortgage loan could be slightly higher than a first mortgage loan that does not include the assistance.
What is the minimum credit score?
All borrowers MUST have a minimum representative Credit Score of 640 with a maximum DTI of 45%. With a credit score of 680 or above, borrowers can have a maximum DTI of 50%.
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 monthly debt payments (including your mortgage, car loans, child support and alimony, credit cards, student loans, etc.)
- Divide this amount by your gross monthly income.
- Then multiply this amount by 100. This percentage is your DTI.
Please keep in mind that you must meet specific underwriting standards. The participating mortgage lender can help you better understand FICO credit score and DTI.
Do I have to be a first-time homebuyer?
No, there is no first-time homebuyer requirement.
Are there income restrictions?
Does the borrower have to take a homebuyer education class?
Government Loan Products: Homebuyer education is recommended but not required.
Conventional Loan Products: Required if all borrowers are first-time homebuyers, at least one borrower must complete pre-purchase homebuyer education and counseling. The following courses listed are acceptable:
- REI Homebuyer Education through EHome America, please click on the following link to take the online course. The cost is $99.00.
- Fannie Mae’s FrameWork Homeownership Course
- Freddie Mac’s CreditSmart
- HUD approved counseling agency
- Homeownership education programs developed by mortgage insurance companies or other providers’ programs that meet the standards for Homeownership Education and Counseling set by HUD or the National Industry Standards for Homeownership Education and Counseling
Lender must retain a copy of the certificate of course or counseling completion in the loan file.
Can the Seller help me pay closing costs?
Yes, the seller can contribute the maximum amount allowed by the first mortgage loan product utilized.
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 charges, 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 first mortgage loan product that the lender has chosen for your loan.
How long does the process take?
Lenders should be able to close a loan with the REI Home100 Program in the same amount of time it takes to close a traditional mortgage loan.
Can I receive assistance for investment property or a second home?
No, the borrower must utilize the assistance on their primary residence.