Chenoa Fund Program Can Help FHA Homebuyers Low on Cash
Conventional wisdom would suggest that you should save until you can afford a 20% down payment before buying a home. In some ways, this makes a lot of sense. Typically, the larger your down payment, the lower your monthly mortgage payment will be and the less you’ll pay in interest over the life of your loan. And, in many cases, you will have to pay mortgage insurance if you put down less than 20%. However, taking the time to save this sum is not feasible for everyone who dreams of owning a home.
Fortunately, Castle & Cooke Mortgage offers a number of options for homebuyers with less than 20% to put down. One popular option is the FHA loan, which only requires borrowers to provide a 3.5% down payment. But even that can be steep for young adults just starting out or families who live on a tight budget. For instance, 3.5% on a $200,000 home amounts to $7,000. To provide some perspective, a 2015 survey from GOBankingRates revealed that less than 30% of Americans have saved more than $1,000 in their savings account. In other words, many Americans may not have even 3.5% readily available. But did you know that there are programs available to help homebuyers purchase a home without having to put any money down?
The Chenoa Fund Down Payment Assistance (DPA) Program, available in most states*, is an excellent example. As the name suggests, this program provides buyers with down payment assistance. Specifically, the Chenoa Fund Program works hand-in-hand with a 30-year fixed-rate FHA mortgage on a single-unit, single-family property, providing assistance up to 3.5% of the home’s purchase price. Sound familiar? This effectively covers the 3.5% down payment requirement of the FHA loan.
The down payment assistance provided by the Chenoa Fund is available in three different forms and the type of assistance you may qualify for depends on your income as a percentage of the median income in your area. As one of only a few lenders offering this program, a Castle & Cooke Mortgage loan officer near you can help you determine if and for what kind of assistance you might qualify.
If your income is the same or less than 115% of your area median income, there are two potential options. You may qualify for the assistance in the form of a non-repayable grant. Just like it sounds, the 3.5% down payment assistance is gifted to you and you do not have to pay it back. Or, you could opt for what is called soft secondary financing. With this option, you do not make payments on the assistance given for 36 months and if you are not late on your mortgage payments during that time, the assistance will be forgiven.
If your income exceeds 115% of your area median income, the Chenoa Fund Program still has an option for you. You can receive the down payment assistance in the form of a fully-amortized second mortgage. For this second mortgage, you can choose either a 10-year term at 0% interest, or a 30-year term at 5% interest. This flexibility is just one advantage of the Chenoa Fund over some state bond programs that also provide down payment assistance, but with stricter income and debt-to-income ratio limits, geographical restrictions and credit qualification requirements.
*Chenoa Fund Program not available in IL, MA, MS, NY, SD & WV.
Castle & Cooke Mortgage, LLC® (NMLS #1251) is a leading independent mortgage lender headquartered in Draper, Utah, with locations across the United States.
Restrictions may apply. Not all who apply will qualify. Program qualifications & offerings are subject to change at any time. Equal Housing Opportunity. Castle & Cooke Mortgage, LLC is licensed in AL, AZ, CA, CO, CT, FL, GA, HI, ID, IN, IA, MD, NE, NV, NM, NC, OK, OR, TN, TX, UT, WA, and WY. Castle & Cooke Mortgage, LLC is licensed by the Arizona Department of Financial Institutions Arizona Mortgage Banker: BK-0908287. Castle & Cooke Mortgage, LLC is licensed by the Department of Business Oversight, under the California Residential Mortgage Lending Act License #4130740. In Colorado, Castle & Cooke Mortgage, LLC is regulated by the Division of Real Estate. Georgia Residential Mortgage Licensee, License #43759. Oregon Mortgage Lending License #ML-4090.