BUYING A HOME
Northeastern Realty can accelerate the process to helping you find a new home in Florida, Georgia, Massachusetts, Rhode Island, and Utah. We assist with our clients to get the right home and loan needed for your situation.
LOAN OPTIONS
The primary barrier to homeownership for first-time home buyers is saving money for a down payment and closing costs. There are programs to help you close the gap with flexible options and low down payment solutions.
HOMEBUYER EDUCATION
This class is for anyone who is interested in buying their first home, whether you are already in the midst of the process or just starting to think about homeownership.
Step 1: First-time homebuyers are strongly encouraged to complete a homebuyer education course. There are several options available:
Recommended Courses:
- Homebuyer U by Freddie Mac
- Free, interactive course
- Six modules
- Can be completed at own pace on desktop, tablet, or mobile
- Homeview by Fannie Mae
- Free, interactive course
- 7 modules
- Can be completed at own pace on desktop, tablet, or mobile
We recommend reaching out to a Northeastern Realty mortgage professional who can provide personalized guidance through the home buying process and help you choose the right educational resources and loan program for your specific situation.
Step 2: You may put in an application for a home loan to see if you can get preapproved. If your score is below 580, you need to work on your credit to bring it above 580. *A 580 score is the minimum required score and does not guarantee approval*
- Government Loans (HUD, FHA, VA, RD):
- The minimum representative credit score is 580
- Manually underwritten government mortgage loans with nontraditional credit are exempt from this policy
- Conventional Products (HomeReady, Home Possible):
- Minimum FICO score is 620 for most scenarios
- USDA Loans:
- Minimum FICO score is 640
- Jumbo 15 Year Fixed:
- Minimum FICO scores vary by loan amount:
- $1,000,000 loan: 700
- $2,000,000 loan: 720-740
- $3,000,000 loan: 740-760
Step 3: After you have applied and received a pre-approval letter, contact a real estate agent, if you don’t already have one and start looking for homes.
Step 4: Find a home, make an offer, get offer accepted, go under contract, start the loan process, CLOSE!!!
We require a minimum 580 for all FHA, VA and USDA loans. We accept scores at a minimum of 620 for conventional loans. For the most favorable approval odds, a score of 640 or better is recommended. Our downpayment assistance loans require a 640 credit score.
- Government Loans (HUD, FHA, VA, RD):
- The minimum representative credit score is 620
- Manually underwritten government mortgage loans with nontraditional credit are exempt from this policy
- Conventional Products (HomeReady, Home Possible):
- Minimum FICO score is 620 for most scenarios
- USDA Loans:
- Minimum FICO score is 640
- Jumbo 15 Year Fixed:
- Minimum FICO scores vary by loan amount:
- $1,000,000 loan: 700
- $2,000,000 loan: 720-740
- $3,000,000 loan: 740-760
We offer VA loans for Veterans and surviving spouses of Veterans and USDA loans. Both loans require no down payment. (Buyer is still responsible for closing costs and not all applicants qualify). We also have down payment assistance.
We help those who are the process of getting their first home, and answer all the questions they have. For purchase with 3% down payment at least one borrower must be a first-time homebuyer.
Zero-Down with FHA 100% CLTV Combo Loan Program
This program offers 100% financing by combining an FHA first lien at 96.5% and a concurrent second lien of up to 3.5% to assist with down payment and/or closing costs.
DPA Program Process
The link to apply for a home loan is: https://northeasternrealty.my1003app.com/
1. ID or Drivers License
2. Most recent 30 Days of paystubs from ALL current jobs
3. Most recent 2 months bank statements that has the money you will use to close
4. Last 2 years of W2s and/or 1099s IRS forms (NOT TAX RETURNS!)
5. Most recent bank statement
That can vary based on multiple factors but as a general rule of thumb: All loans have closing costs that are on average around 3-5% of the purchase price of your home (the price you agree to pay for it on the contract).
For example, if you are buying a home for $200,000 you can expect to pay on average $6,000-$10,000 for the closing costs (in addition to any down payment required).
Conventional loans have a 3% or 5% down payment requirement.
FHA has a 3.5% down payment requirement.
VA and USDA loans require NO DOWN PAYMENT.
Down payments are in addition to closing costs.
Closing costs are on average 3-5% of your home purchase price and are the costs associated with your loan and consist of the following (AND ARE SUBJECT TO CHANGE BASED ON MANY DIFFERENT FACTORS):
The cost of your interest rate (Interest rates change daily so this number can change until your rate is locked).
Closing attorney fees (You have to pay the attorney for assisting with your closing and doing a title search and you can choose any attorney that you like)
Homeowners insurance is paid at closing for 1 full year
Appraisal fee (You as the buyer pay to see how much the home is worth and this is a part of your closing costs. You typically pay this out of pocket before closing).
Prepaid interest (You pay interest for the remainder of the days in the month after you close. For instance, if you close on the 1st, you may have 29 days of interest, but if you close on the 25th, you may only pay 5 days of interest so closing towards the end of the month can save you money at closing).
Escrow payment (Your homeowner’s insurance and property taxes may be escrowed and if so, you will pay at closing a few months into your escrow account. You typically pay 2-4 months into your escrow account, but this number can change).
Other miscellaneous loan fees such as origination fees to your lender for originating your loan, application fees, underwriting, and processing fees, homeowner association fees, realtor admin fees, ETC
3-5% is only an estimate and a gauge to know what you may expect. Actual closing costs may be higher or lower.
VA loans– These loans are for Veterans. These loans require no down payment. You are only responsible for closing costs. You must be eligible for this loan. You can visit
https://www.benefits.va.gov/homeloans/documents/docs/veteran_registration_coe.pdf to to get your Certificate of Eligibility. You may also need a form DD-214. If you are not a Veteran or have never served in the military, you are NOT eligible for this type of loan. This loan is best used by those who are serving or have served in the military at some point previously and would like the option to not have a down payment. Standard DTI allowed up to 41%, but you may go higher in some cases with compensating factors.
USDA loans– These loans can be used by anyone. These loans require no down payment. You are only responsible for closing costs. There are income restrictions meaning your household must be below a certain income to qualify. You can find income guidelines by county and state using this link and looking next to the row for your household size and MOD-INC-GUAR. LOAN: https://www.rd.usda.gov/files/RD-GRHLimitMap.pdf This loan also is only available in specific areas which are deemed “rural” areas.
You can find the eligible areas using this link https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do (You must click SINGLE FAMILY HOUSING GUARANTEED. If the home you wish to purchase or area you wish to purchase in is NOT eligible on the site, YOU DO NOT QUALIFY FOR THIS LOAN! This loan is best used by someone who would like the option to not have a down payment and OK with living in certain restricted areas. Standard DTI allowed up to 41%, but you may go up to 44% in some cases with compensating factors.
FHA loans– These loans are for anyone and can be used anywhere. These loans require a 3.5% down payment plus you are also responsible for closing costs. This type of loan also has MIP (Mortgage Insurance Premium) which is included in your mortgage payment. This insurance is to protect against default of the loan and is in addition to homeowners insurance which you must have as well. These loans are regulated by the FHA and may have stricter guidelines regarding the condition of the home you purchase. This loan is best used if you do not qualify for a no money down loan, but want a low down payment. Standard DTI allowed up to 43% but you may go up to 57% in some cases with compensating factors.
Conventional loans– These loans are for anyone and can be used anywhere. These loans require a 3%-5% down payment plus you are also responsible for closing costs. This type of loan also has PMI (Private Mortgage Insurance) if you put down less than 20% which is included in your mortgage payment. This insurance is to protect against default of the loan and is in addition to homeowners insurance which you must have as well. (You can avoid PMI by putting down 20% or once your Mortgage balance is below 80%. This loan is best used if you do not qualify for a no money down loan, but have some money saved and do not want strict guidelines on the type of home you purchase. Standard DTI allowed up to 45% but you may go up to 50% in some cases with compensating factors.
We offer traditional loans for self-employed borrowers and will rely on using your two most recent tax returns. We will use the income that you receive AFTER deductions to qualify you for a home loan. In addition to tax returns for two years, we will also request your drivers license or state issued ID, a profit and loss statement, and your most recent two months bank statements. The minimum credit score required is 580.
We also offer bank statement loans that do not require tax returns. You must provide at least 12 months of bank statements and the minimum credit score required is 620. Down payment for this loan is 10%.
Each different loan has different requirements for waiting periods and it is important to note, the waiting period starts from the DISMISSAL/DISCHARGE OR COMPLETION DATE and NOT the date filed and you want to have no late payments after the dismissal date for best chance of approval.
USDA: Chapter 7 or 13 Bankruptcy: 3 years from discharge or dismissal date
Foreclosure: 3 years from completion date
VA: Chapter 7: 2 years from discharge or dismissal date
Chapter 13: 12 months of satisfactory payments and Trustee or Bankruptcy Judge approves the new credit
Foreclosure: 2 years from completion date
FHA: Chapter 7 or 13: 2 years from discharge or dismissal date ***Chapter 13 may be allowed after 1 year of pay-out period, satisfactory payment history and permission from bankruptcy curt for transaction.
Foreclosure: 3 years from completion date
CONVENTIONAL: Chapter 7 or 11 Bankruptcy: 4 years from discharge or dismissal date
Chapter 13 Bankruptcy: 2 years from the discharge date, 4 years from the dismissal date
Foreclosure: 7 years from completion date******If foreclosure and bankruptcy on the same mortgage, the bankruptcy waiting period may be applied instead of foreclosure period as long as there have been no late payments since discharge.
PRE-APPROVAL LETTER
A pre-approval letter from a lender means the broker has investigated your assets, debt, and credit history to determine whether you can qualify for the loan. Get prequalified online in minutes.
MORTGAGE FAQs
Answer your mortgage loan questions with our mortgage FAQs. Learn more about prequalifying, applying, rates, terms and more at Northeastern Realty.
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