Episode 68, Part 2: DPA Programs That Aren't FHA
John Schutze & Andrew Thurston discuss the different down payment assistance program alternatives to FHA. Listen in to see which programs you may qualify for!
"A lot of the folks I work with are first-time homebuyers and millennials," Andrew says. "A lot of younger people don't have a lot saved up and don't know what to do, so they come to us to see what their options are."
"One of the neat things about Supreme Lending is we offer several down payment assistance programs," Andrew says.
Those programs include the SETH program, TSAHC program, Travis County HFC program, and the My First Texas Home TMP 79 program. You can learn about all of these programs right here!
DPA programs help you cover your down payment and maybe some of the closing costs. There is, of course, a trade-off: The closing costs are a little higher and interest rates are a little higher with these programs.
An FHA loan allows you to do 3.5% down payment with pretty good interest rates and are usually more forgiving on the credit score side, but their monthly mortgage insurance is usually higher.
An alternative that makes sense for some people with a higher credit score is a conventional DPA program: They can get a conventional loan with an even lower down payment at 3% and still receive down payment assistance!
Conventional loans are also great for condos, since FHA loans for condos are generally much more strict on approving certain condos.
"With an FHA loan, you have to look at the spouse's credit score. In some cases, one spouse has great income and credit, but the other spouse may have a lower credit score or more debt. Unfortunately, with FHA loans, we must include both debts for each spouse. With conventional loans, you don't have to do that and can qualify with just one spouse's information," John says.
Nowadays, there are a lot of down payment conventional programs that are better options than an FHA loan! There are some from Fannie Mae, some from Freddie Mac, and all with different eligibility factors.