Alternative Pathways to Homeownership in Today’s Real Estate Market

October 12, 2023

After larger down payments in bidding wars became the norm over the past few years, down payments are shifting—and shrinking, according to a report from Realtor.com.
 
Facing diminishing down payments and rising rates, many homebuyers – especially first-time buyers and those with limited financial resources – are finding it increasingly difficult to buy a home. However, there are lesser-known avenues that could be the key to getting over these homebuyer hurdles, even in today’s market.
 
The experts at BayFirst are here to explain the possibilities beyond a traditional mortgage and dispel the myth that buyers always need 20% down or costly private mortgage insurance (PMI). Options include:
 

• Lease-to-Own Arrangements: These agreements allow buyers to purchase a home after renting for a period of time, usually 12 months. With a rent-to-own contract, every month a portion of the rent goes toward the down payment on the home. If a buyer doesn’t buy the property at the end of the lease, they lose their extra payments. That’s why it’s important for buyers to make sure they will qualify for the home loan and be ready to buy at the end of their lease.

 

• Government Assistance Programs: There are several government programs that provide financial assistance, grants, or low-interest loans. At BayFirst, buyers can take advantage of FHA Loans (insured by the Federal Housing Administration), VA Loans (backed by the U.S. Department of Veterans Affairs) and USDA Loans (backed by the U.S. Department of Agriculture). For more information about each and their low down payment requirements, check out this blog.

 

• Creative Financing Solutions: The BayFirst 100% Financing Loan can get buyers in the door with no money down, no PMI, and assistance with closing costs. The program is designed for customers who have shown the ability to make their monthly rental payment but don’t have the cash savings to purchase a home for the down payment and closing costs.  It encompasses a first mortgage at 75% LTV (which is a measure comparing the amount of the mortgage with the appraised value of the property) with a second mortgage covering the remainder of the sales price up to 100% CLTV (a measure comparing of all secured loans on a property to the value of a property).  Thus, no down payment required.  In addition to having no money down on the purchase of a new home, BayFirst also provides up to $2,500 toward closing costs on the second mortgage. 

 
Regardless of your financial situation, it’s important to consult with a mortgage expert before choosing any home loan. BayFirst is a leader in the marketplace and our lenders are standing by to review all paths to homeownership to empower you with the knowledge and resources you need to fulfill your dream of owning a home, despite the challenges posed by today’s real estate market. Call us, fill out the form below or stop in today!