What is 3/2 mortgage loan financing?
August 31st, 2008 By Peter G. Miller
There are a number of loan programs directed toward first-time buyers that allow the purchase of property with as little as 3 percent down.
The way they work is that a purchaser puts up 3 percent of the sale price and another party puts up 2 percent. Who puts up the additional 2 percent? Programs differ, but some choices include:
- • A friend, relative or other third-party providing a gift. (In late 2007 HUD announced new rules which would ban third-party contributions for FHA loans. Under these programs, owners would provide both down-payment dollars and a small fee to a non-profit organization. The non-profit would then provide a down-payment gift to the buyer. FHA reform legislation passed in the summer of 2008 banned down-payment assistance programs, however such a ban may be overturned — check with lenders for the latest rules.)
- • A friend or relative providing a loan.
- • An employer providing a loan.
- • An employer proving a loan that does not have to be repaid if the individual stays with the company for a certain amount of time.
- • A community group providing a loan or grant.
- • A government agency providing a loan or grant.
- • Amazingly enough, a lender who provides both 95 percent financing and a 2 percent loan.
For details, please contact local lenders and real estate brokers.
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