So you have made the decision to enter into the real estate market - you want to buy a home. This opens a flood gate of questions. One of the first that needs to be addressed is, “How will I pay for this investment?” Many people lock themselves out of the real estate market because they do not think they can afford to buy, but there are many loan options for buyers.
The most common loan is a conventional loan. The conventional loan uses Fannie Mae or Freddie Mac guidelines for conforming loans. As of right now these guidelines look like the following: The minimum down payment for a loan up to $417,000 is 5%. From $417,001 up to $625,000 the minimum down payment is 10% and from $625,001 or more - a jumbo loan - requires a minimum down payment of 20%. If the loan amount is between $3-4M the accepted minimum deposit is variable, but respectively higher as well.
As of right now you may be thinking ‘awesome I can get a loan for $200,000 and all I have to get together for a down payment is $10,000 - Maybe I can swing this!’ There are secondary fees to consider and those include PMI, private mortgage insurance, and bank fees. In short PMI is an insurance paid for the bank taking the risk on a homeowner to make good on the loan payments. It insures the bank for up to 80% of the home’s value if the homeowner defaults on the loan if the loan if for the full value of the home.. PMI can be between 0.3 - 1.15% of the original loan amount per year.
Using the same example as above that would be $200,000- $10,000= Loan amount of $180,000
$180,000 * avg 0.725% PMI = $1,305 per year. /12 months=$108.75 per month.
Tack that onto your $890.77 mortgage payment and you have your monthly payment.
Once the loan amount is less than 80% of the value of the home the PMI can be eliminated.
A popular loan for first time home buyers is the FHA. This is a popular loan for 1st time home buyers because generally speaking 1st time home buyers have less saved funds, have not built as much credit and this program has a lower credit score requirement, less money down, and more lenient debt to income requirements. However FHA loans have some drawbacks to protect the lenders. Foremost, there is a 1.75% upfront fee at closing along with a 0.5% annual renewal premium paid annually over the life of the loan that will not be suspended if the loan-to-value changes as the PMI does. The home also must appraise for the cost of the loan and must meet basic condition requirements. Back to the benefits though! The minimum down payment is only 3.5%, so back to the earlier example that is only a $7,000 down payment on a $200,000 loan! Some people that use this option do so as a way of entry into the market. After some time of making good payments and building good credit, you can refinance for a conventional loan and if your loan-to-value has risen you may not even need to pay the PMI, as well as the renewal premium you will be rid of.
There are many other loan types out there, but having knowledge of the two most common will help you on your way to getting your new home and a great investment.
DC Open Doors Program offers first-time and repeat home buyers a Down Payment Assistance Loan that does not need to be paid back.
DC’s Housing Finance Agency, or the DCHFA, reconfigured its DC Bonds program called “DC Open Doors,” for new first time home buyer assistance, four years ago this summer. The program, which has given over $200 million in down payments for homes in the city, is now even more accessible. Those working in DC who want to live downtown but have trouble making the down payment can utilize this program.
The program and its funding are available to first time home buyers and repeat home buyers. The DC Open Doors Program is constructed around what’s called a “Down Payment Assistance Loan,” one that doesn’t have to be paid back.…
Home loan programs that are offered for teachers in Washington, DC.
If you're a teacher in the D.C. area, did you know there are home loan programs available for you? There are many incentives too! Programs involve up to $800 in reduced closing costs for teachers and discounted real estate agent fees—combined with the discounted closing costs you can get up to $1,600 in credits while closing.
There’s priority loan processing and donations to your school. Up to $400 in donations can be given to your preferred school program. Teachers can even choose what particular program they want to give to—music, arts, science lab, you name it!
There’s also homes for heroes programs, or discounts of up to 25 percent of your realtor fee when you’re buying and…
The pros and cons of the Federal Housing Administration (FHA) loan.
At times homebuying can get overwhelming, especially when it comes to loans. We’re here to make things easier for you by sharing the pros and cons of FHA loans.
FHA loans are government insured loans from the Federal Housing Administration. This means FHA guarantees your loan but doesn’t actually lend out the money. When you take out loans, they need to be with FHA approved lenders. Some benefits of FHA loans include less down payment required, more forgiving debt to income ratio and less restrictions on bankruptcy and foreclosure.
One of the main advantages of an FHA loan is that a very large down payment is unnecessary. Loans can be as low as 3.5 percent, which is great for…
The District of Columbia Association of REALTORS®(DCAR) announced the First-Time Homebuyer Tax Benefit has been passed and funded by the DC Council. The First-Time Homebuyer Tax Benefit allows first time home buyers in DC to pay a .725% recordation tax on homes no more than $625,000 that earn less that 180% AMI beginning this October.
So what exactly does that mean?
First let’s talk about the recordation tax. Recordation tax is part of various closing costs and based on the purchase price. If the sale price is $399,999 or less than the DC transfer and recordation tax rate is 1.1%. Sales of $400,000 and above are taxed at the rate of 1.45%. For example, if you bought a $250,000 home in DC, the buyer and seller would each pay $2,750 in DC transfer…
Are you in the market to buy a home in Washington, DC? You may have heard of some of the many programs, lending options, and tax benefits that exist in the market today. To name a few: DC Opens Doors, Loan Programs for Teachers, and the Down Payment Assistance Program. You may have even heard of first-time home buyer tax benefits in the past, but they have not been renewed or implemented for years.
As recently as 2011, there was a DC first-time home buyer tax credit in place that reduced the buyer's recordation tax by 50 percent. This credit saved many first-time home buyers thousands of dollars. There may be good news on the horizon for first-time buyers in DC. On October 6th, a few DC council members proposed a new first-time home buyer tax…
Affordability: Loan rates have been locked in by buyers as low as 4% in the past month. Interest rates have climbed from around 3.5% last year to an average of 4.25% right now, and are predicted to continue to slowly climb.
It’s a better investment than renting: The average rent per one bedroom is $1,850 in a neighborhood like Adams Morgan. The average sales price in that neighborhood is $578,774.00 With a 4% interest rate on a conventional loan and putting 20% down, the monthly mortgage payment is $2,210.41. The year-over-year increase in sales price is 20% in that neighborhood! If sales continue on that trend the same home could be sold for $694,528.80 next year.
Many buyers think that an FHA loan should only be used as a last resort. Indeed, more often than not conventional loans are the way to go over FHA (which stands for Federal Housing Administration) loans. However, if you’re only able to put 3% or 3.5% cash down on a property, an FHA loan could make more sense for you. Home prices in the DC area have skyrocketed in the last few years, and with that comes more difficulty on the part of buyers to put a greater percentage down on a property. What exactly are the pro’s and con’s of FHA loans? Well, that’s exactly what we’re here to tell you:
Pro’s:
The buyer only has to put down 3.5% of the total sales price on a property.
100% of the down payment can be a gift from a family member, friend,…
Are you a teacher in Washington, DC? We understand that buying property can seem daunting for a number of reasons, including cost, but there are a few loan programs that can help. One is the Employer-Assisted Housing Program, or EAHP. This helps full-time DC Government employees become first-time homeowners within the District. You must have a good credit rating and enough income to afford a mortgage loan. If you are deemed eligible, you will receive matching closing cost funds up to $1,500 ($500 for each $2,500 saved by an employee) and a deferred second trust loan up to $10,000. Applicants are allowed to select a first trust lender of their choice. The maximum loan amount for the EAHP is $625,500. A second program that we recommend is the Home Purchase…
We have found it very difficult for veterans to find properties that are approved buildings for Veteran Home Loans. So our team here at Capital Park Realty have decided to create a solution! Here we have built a page that veterans can find answers to their lending questions and we have sorted out the buildings that are Veteran Home Loan approved to make the search MUCH easier!
Veterans Buying in DC
We look forward to helping when you are ready to make a move.
The Federal Housing Administration Announced today that it will reduce annual premiums by 500 basis points (half a percent). This means real savings for buyers using an FHA loan to finance their home. On a $500k home purchase using an FHA loan, the drop in mortgage insurance rates work out to about $2412.50/year in insurance savings. That's over $300/month! This is great news for first time buyers in particular. The FHA loan is a great program for any buyer with less than perfect credit or a high debt-to-income ratio. Find more information for buyers, including a list of VA approved buildings, or contact us directly through the website.
he Down Payment Assistance Program. You may have even heard of first-time home buyer tax benefits in the past, but they have not been renewed or implemented for years.
Our top five reasons to buy now!
Many buyers think that an FHA loan should only be used as a last resort. Indeed, more often than not conventional loans are the way to go over FHA (which stands for Federal Housing Administration) loans. However, if you’re only able to put 3% or 3.5% cash down on a property, an FHA loan could make more sense for you. Home prices in the DC area have skyrocketed in the last few years, and with that comes more difficulty on the part of buyers to put a greater percentage down on a property. What exactly are the pro’s and con’s of FHA loans? Well, that’s exactly what we’re here to tell you:
Are you a teacher in Washington, DC? We understand that buying property can seem daunting for a number of reasons, including cost, but there are a few loan programs that can help. One is the Employer-Assisted Housing Program, or EAHP. This helps full-time DC Government employees become first-time homeowners within the District. You must have a good credit rating and enough income to afford a mortgage loan. If you are deemed eligible, you will receive matching closing cost funds up to $1,500 ($500 for each $2,500 saved by an employee) and a deferred second trust loan up to $10,000. Applicants are allowed to select a first trust lender of their choice. The maximum loan amount for the EAHP is $625,500. A second program that we recommend is the Home Purchase… 