Today, with the help of Justin Allender, a Central Florida mortgage loan consultant, we’ll discuss a down payment assistance program you should take advantage of.
The CBC Chenoa Fund Down Payment Assistance Program is an affordable housing loan program that provides a 30-year fixed-rate FHA mortgage in conjunction with a 3.5% second mortgage. This allows a customer or client to finance 100% of the purchase price of a home. At 8%, the second mortgage rate is a little bit high, but that doesn’t prevent homebuyers who may not have been able to save enough for a down payment from benefiting from it.
Since it is an FHA loan, the program is capped by the FHA loan limit, which is $314,325 in the Orlando/Lake County/Kissimmee area. Plenty of homes here would qualify for that amount.
A lot of traditional down payment assistance programs out there don’t require payments on the second mortgage; it’s sort of a deferred second lien that is paid off when you sell the home or refinance, whereas the CBC Chenoa Fund does require payment on the second mortgage.
There are also income limits that we have to meet which allow for financing up to 115% of the HUD’s median income limit. For our area, that’s roughly $75,000, and considering that the average household here makes $53,800, this opens up a lot of opportunities.
“This program is huge for families that qualify for a mortgage but have a hard time coming up with the necessary down payment.”
A lot of people will ask, “If we need 100% financing, why wouldn’t we just go with a USDA loan?” Well, not all areas are USDA-eligible. This program opens up 100% financing to additional families that may not be looking to buy in USDA-eligible areas.
But do you have to be a first-time homebuyer to take advantage of the program?
Actually, you don’t! However, to be eligible, you cannot concurrently own additional properties, including vacation homes and rental properties. It’s also important to note that the program has some property-type restrictions. For example, you can’t qualify for it if you’re purchasing a new construction home or a condo.
Another cool thing about the program is that it has no minimum required investment, where some down payment assistance programs require the borrower to actually add some of their own money in.
So with the CBC Chenoa Fund, you could have a 96.5% first mortgage, a 3.5% second mortgage, and in the contract negotiations, you could look to the sellers to pay the closing costs on your behalf. This results in the buyer just needing funds for an earnest money deposit, appraisal fees, and the home inspection costs. Potentially, you could get into a home for $2,000 or less; you’d be hard-pressed to find a rental that low!
If you or anyone you know has questions about the CBC Chenoa Fund Down Payment Assistance Program, please don’t hesitate to reach out to us. We’d love to speak with you more in depth.