Down Payment Assistance- Options for First Time Buyers who make middle income (loan, property tax)

[ukikkgr]

Anyone know of any downpayment or homeowner assistance programs that would fit our situation?

My wife an I are recently married. We both make a decent income ($130K annual combined) and we have very low to medium debt ($8K revolving, $12K installment). Our scores are low to high 600's (mine- 635 mid, hers -674 mid).

We've been renters our entire lives and had it not been for the situation I'm about to describe then we'd continue to rent and build a nice downpayment.

Last fall my wife's father passed away very unexpectedly. He had planned very well financially however it is taking some time to work through his accounts and his estate. My wife's mother however is disabled (a quadripeligic) and requires daily assistance to feed and bathe herself. Together they lived in a rent controlled seniors independent living complex about 30 minutes away. He cared for her with the help of private aides and nurses. A few weeks after the funeral and deciding what to do we settled on the prospect of buying a home and moving her in, instead of committing her to a nursing facility. She's been spending a total of $1275 per month on private nursing care in addition to her rent and living expenses (which are minimal) to provide nursing care while we work and try to find a new place to live.

We've applied and been pre-approved conventional for $400K 5.8% with 5% down or 6.15% FHA. The problem is homes in our area (NY) are so expensive and coupled with insanely high property tax we're finding it hard to even commit 3% down. Between our savings, recent tax returns, and a future sales bonus I've estimated we could scrape together at most, $16K for downpayment and closing costs. A starter home in our area starts at $275K and for the space we need (I work from home) we'd need to spend at least $300K-$325K, to find the right home that offers what we need (mother/daughter, home office...etc). Taxes start at $6K and range, on average between $8-10K..... THIS YEAR (who knows about next year). We both have steady jobs and more than 4 year steady employment. We make over the qualifying amount for SONYMA however we still can fit into FHA (county limit is $362K).

-What are the best downpayment programs out there and the ones to avoid?

-My wife is named as Power of Attorney over her mothers finances and is named on both a checking ($30K) and a CD ($95K). Can she use declare those accounts as assets when we apply for firm financing? We don't want to tap into those accounts for our down payment, however my ML will contribute toward our monthly PITI. We also plan on naming her as a dependent on our next year's taxes.

-Is there any grant assistance that would help us in this situation. We are buying a home in order to give my ML a safe place to live. It's a shot in the dark however you hear about $millions in HUD grants that go unused each year. If they exist where would I look for grants?

-On a $325K home with $9K in taxes is over $3100 per month PITI. We can rent the same home for $2000 per month (no utilities incl). We have no idea how long we could be in this living situation. We'd like to have kids and raise a family. Does it make sense in the short term to rent until we can improve our credit scores and save a larger downpayment?

[ChipL]

Down payment assistance programs (DPAs) that are used with FHA mortgages come in a few different flavors, but the bulk of them use seller concessions funneled through a non-profit organization.

It works like this -

First you find a house you like. You then negotiate the price and the amount the seller will give back to you to cover your costs. FHA allows 6% from the seller. FHA requires a down payment of 2.25% from either your own funds or a gift, the gift coming from either an immediate family member, an employer, non-profit organization or a municipality.

There are non-profit organizations that have sprung up solely for the purpose of loan gift funds. The first, and most popular, of these is Nehemiah. The way this legal shell game works is that the seller "gives" money to the non-profit. The non-profit in turns "gifts" the money to the borrower...and it's all legal. What's in it for the non-profit? They charge a fee for this service..that's how they get their money.

Your mortgage company or bank has a list of DPAs at their disposal.

HUD grants are federal money that are channeled to the states who in turn channel it to the county and/or city governments. These funds are dispersed on the local level. Once again, your mortgage co. or bank should be able to give you information, or at least point you in the right direction, as to whether or not you would be eligible for these funds.

The use of DPAs is very common..I use them frequently for clients who either don't have the down-payment money or would rather not use their cash on hand.

[hindsight2020]

Considering the median home in your area, the taxes involved and your family situation, I'd rent, hands down. New England in general has become overpriced, prices are too inflated for real people with real incomes. People up there own mostly as a result of inheritance anyways (which is a contributing factor for the exodus to the cheaper south and midwest). Rent a nice house for a fraction of what your financing expenses would be and take care of the family. Good luck.

[neekah18]

Why not keep her in the facility she is in? Taking care of someone in her situation is ALOT of work. It will take a toll on you and your wife and also if she is getting great care there why not leave here where she is happy? I live in NJ and home prices and taxes are in sane so I can only imagine how it will be for you two. Have you thought about going to a mortgage broker? I have heard they can help find the best programs for your situation as a first time home buyer.

[sean98125]

You're probably better off renting for right now and saving your money. If you really need to buy now, tap in to your mom's account for the down payment. You're only talking about $4000 on top of what you can save, and she won't have to pay the $1275 a month she's paying now.

If you were serious about it, you could save up the money in no time. Your take home is probably over $8000 a month and you only have $20K in debt. You should be able to save if you think of every meal out and every luxury as something that is keeping you from your dream.