Buying Boston Area Real Estate With No Money Down?

Buying Boston area real estate used to require 20 percent down in most cases to get the best deal and avoid Private Mortgage Insurance. In recent months, the Obama administration has taken several steps to expand the credit box and make it easier for borrowers, especially first-time homebuyers, to buy Boston area real estate. To that end, in October, Fannie Mae and Freddie Mac announced 97% loan-to-value offerings.

Is buying Boston area real estate becoming possible again with no down payment?

For some borrowers, saving up 3% for a down payment is still a hurdle they can’t quite clear. However, a new program announced recently will allow some borrowers in select locations to put down even less for a down payment. It seems the “no money down” loans may be attempting a comeback. Yep, the same no money down type of loans that got us into this whole real estate and mortgage crash problem in the first place.

BBVA Compass announced the launch of a new program called Home Ownership Made Easier, or HOME for short, designed to help low and moderate-income borrowers become homeowners by helping to overcome one of the “most significant barriers” to homeownership, the down payment.

In the HOME program, qualifying borrowers will be eligible to finance 100% of the home’s value. In addition to offering 100% LTV loans, BBVA will also contribute up to $4,500 toward “certain closing costs” associated with obtaining a home loan.

But not every potential borrower is eligible for the HOME program. The subject property must either be located in a low-to-moderate income census tract (as determined by the Federal Financial Institutions Examination Council) or the loan applicants cannot have an income greater than 80% of the median income for the area, per the guidelines from the U.S. Department of Housing and Urban Development.

In some cases, clients participating in the bank’s HOME program may pay a monthly mortgage payment that is less than what they currently pay as renters for buying Boston area real estate. We’ll keep you posted on how this one goes. Meanwhile…

Also of Interest  Boston Area Real Estate Trends to Watch

Mortgage Apps Show More People Buying Boston Area Real Estate

Despite recent data showing weak home sales for January, a new report shows home buyers may be edging back into the market now.

Mortgage applications for buying Boston area real estate rose 5 percent on a seasonally adjusted basis for the week ending February 27th from the previous week, according to the Mortgage Bankers Association (MBA). They are still 2 percent lower than the same week a year ago.

Lower rates could reinvigorate refinances, but mortgage rates do not seem to be the primary driver for those buying Boston area real estate. Rising home prices and very tight inventory of homes for sale have been major barriers to entry for first-time and move-up buyers alike. A recent report showed price gains accelerating again after a year of easing. Spring generally brings more sellers to the market, but so far Realtors are not seeing enough new listings at affordable prices to meet the demand.

In the meantime, you can get more information about news that may affect buying Boston area real estate in our section of articles on Boston Real Estate News to your right under Boston Real Estate Categories.

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