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There are many ways to help our veterans get into these new homes.
This page will help describe some mortgage options available.
People may choose to buy the home cash, or they can choose any financing option available to them.
They may also choose any bank or lending institution for purchasing. Mortgage interest rates are expected to rise soon, so consider taking advantage of the low rates while they are available.
We have identified potential zero down new construction financing for veterans, sign up for the e-mail updates at the bottom to learn more.
We will be coordinating with builders who will build these homes for our veterans. If you know a Builder/Developer that might like to serve our veterans, let us know.
VA Financing: For veterans who have their VA eligibility, a zero down payment construction loan is possible! If the builder is willing, the closing costs may also be rolled into the financing creating a true "zero down" purchase. The construction loan would roll to a VA final loan after construction is completed. There would be "earnest money" paid when a purchase agreement is signed, but that should be returned after closing in a "zero down, zero closing cost" scenario.
Example transaction: GI Jane and her husband are building an Energy Positive home. They are building their new home for $150,000. They put $2,000 down as earnest money when they signed the purchase agreement, and are choosing to roll the closing costs of $5,000 into the loan, for a total end loan amount of about $155,000. their interest rate is 4.5% fixed, and the principal and interest payment is $828 per month. Add to that homeowners insurance, and property taxes. Because they are buying new construction, the property taxes may be considerably less the first few years until the taxes take the home value into account. Their estimated total payment is under $950 a month. Because they no longer have a heat or electric bill, they are saving an additional approximately $200 a month, and living in a new house around other veterans. When they get their next vehicle, they can save on fuel costs too by buying a hybrid and charging it for free at home. Taking the savings into account of $200-500 a month, their $950/month house payment is easier to afford, and maybe they can pay it off much faster with the savings!
The Navy Federal Credit Union: They offer multiple home loan types including FHA and VA loans. However, it has its own selection of zero down home loans that have several similarities with the VA-backed mortgage program. These similarities include the elimination of mortgage insurance premium (MIP), and the ability to roll the funding fee into the loan amount. The 100% Financing HomeBuyers Choice Mortgage is ideal for first-time homebuyers. However, it is also available for repeat buyers who intend to live in the home they need to finance with the loan.
Rural Housing: This is another zero down payment option if the home is in an area far enough from metropolitan areas.
This program assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. Check their website to see if where you want to buy is in an area served by this program:
This program works well for lower income home buyers, as the buyers income must be BELOW certain guidelines to qualify.
The interest rate and costs are usually a little higher to offset the increased risk of no down payment, but if you cannot come up with money down, this may be worth looking at. VA financing is usually a better option if you qualify though.
Example transaction: Ron is buying a house that is finished and just received it's certificate of occupancy. His income is below the income limit for where he is buying, and is purchasing a $140,000 new Energy Positive home. He wants to keep as much savings for retirement as possible, so he is rolling his closing costs of $5,000 into his mortgage, for a total purchase price of $145,000. He put earnest money of $2,000 down when he signed the purchase agreement, and will get that back after closing. His interest rate is 4.75% fixed for 30 years, and his principal and interest payment is $806 per month plus property taxes and homeowners insurance. His total payment is estimated under $950/month.
https://www.whatsmypayment.com/USDA/ He is also saving about $200-500/month with no heat or electric bills, and possibly reduced fuel bill.
FHA financing: FHA financing is a 3.5% down payment program that you can choose to roll the closing costs into the mortgage as well. You may be able to use money in your 401K for the down payment, paying yourself back from the utility savings each month! Interest rates are usually around the same as VA financing, but FHA charges "Mortgage Insurance Premium" (MIP) to cover foreclosure losses because of the small down payment. Still a good option to consider, and FHA loans can be assumed by a qualified buyer for a small fee. Should interest rates rise, an assumable mortgage at a lower fixed rate could help sell the home faster.
If purchasing where there is an association fee, the complex needs to be FHA approved for financing.
Example transaction: Jeff and Julie have about $5,000 saved for a house (or can get gift funds from a blood relative...see FHA guidelines). They also can choose to roll the closing costs of $5,000 into their loan. They put $2,000 earnest money down when they signed the purchase agreement, and brought another $3,000 to closing for a total down payment of $5,000 on their $140,000 purchase (They rolled their $5,000 closing costs into the loan, and put down $5,000, and MIP adds about $1,200) so their loan is $141,200). At 4.5% fixed interest rate, their payment for principal and interest is around $728 per month. Total estimated payment is under $875/month, while saving $200-500 a month in utilities and fuel.
Conventional Financing: This can be usually anywhere from 5% up to any amount you would like to put as a down payment. Again, you may be able to use money from your 401K for the down payment. The more you put down, the lower your payment. Conventional programs with less than 20% down payment charge "Private Mortgage Insurance" (PMI).
Credit Unions: If you belong to a credit union, the relationship you have with them may help in getting a loan.
Portfolio Loans: Lenders typically need to fit borrowers into certain parameters of lending, so they can package the loans and sell them in batches. If you don't fit into the "box", you may want to pursue a "portfolio lender". They are usually local banks that don't intend on selling your mortgage on the market, they intend to keep it. You don't need to fit in a "box", and the lender can choose other lending criteria.
New construction financing: Typically banks require 20% down for construction loans. We have found zero down payment new construction financing for our veterans, and 5% down construction loans for
non-veterans! Sign up for the weekly e-mails below for details.
Energy Positive Homes, Inc.
We serve the entire U.S. , communities starting in Mn and WI.