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A Game Changer for Borrowers with Limited Down Payment Options – The HOPER FHA Mortgage

HOPER graphic

I have a new mortgage product available that can give up to $13,000 in down payment or closing funds for FHA borrowers.  

Best of all, it isn’t a down payment assistance program, it’s actual earned income that is used for qualification purposes and can be utilized any way the borrower would like.

shopping cart with money on top of a laptop

HOPER allows homebuyers to earn up to $13,000 (3.5% of the home purchase price) toward the home purchase—with no repayment, no liens, and an interest rate that’s 1%-2% lower than standard down payment assistance (DPA) options.

Unlike standard DPAs, which often come with higher interest rates and restrictions, HOPER gives buyers real financial flexibility.

Additionally, homebuyers qualify for $10,000-$12,000 in tax credits on average within the first year, allowing them to replenish their savings to create an emergency fund. This financial boost can help set them up for long-term success as a homeowner.

Click here for the link to view a video of the program:

HOPER video link

Who is HOPER, and why are they paying FHA homebuyers?

HOPER is a socially-innovative research organization, studying the positive impact that two cash inflows —up to $13,000 at closing and $10,000-$12,000 within a year after closing—along with financial mentorship has on loan performance. Their goal is to prove, through real-world data, that:

  • Savings rates go up
  • Default rates go down

To conduct this research, they pay FHA homebuyers for their participation, much like a second job.

How can borrowers use the 3.5% up to $13,000 from HOPER?

This isn’t a loan—it’s earned income, meaning borrowers have full control over how they use it:

  • Down payment & closing costs – Reduce their upfront cash needed to close.
  • Interest rate buy-down – Lower their monthly mortgage payment.
  • Paying off high-interest debt – Improve their overall financial standing.
  • Savings – Strengthen their emergency fund.
How HOPER funds can be used

Why would a borrower choose the HOPER program when buying a home?

Here’s why HOPER is a game-changer for FHA homebuyers:

HOPER benefits
  • Receive up to $25,000 in financial support—$13,000 upfront + $10,000-$12,000 in tax credits.
  • Lower monthly costs—Reduce or eliminate their electric bill, protect yourself from rising utility costs.
  • Better loan terms—No liens, no repayment requirements, lower interest rates than DPAs.
  • Flexibility—Use their funds strategically to reduce debt, cover costs, or save.

A Real Example

HOPER example

What is required to participate in this project?

1. Buyers are to complete an online financial education course before buying their home (4-6 hours). This equips them with smart money habits and unlocks the 3.5% of the purchase price up to $13K, which is deposited into their savings club account to be used at closing.

2. Sign up for an online financial mentorship course (to be completed within one year of purchasing your home). This prepares them to make wise financial decisions with the $10,000-$12,000 tax credit they will receive, ensuring they build savings instead of spending it.

3. Undergo an energy assessment on the home they are buying. If solar can offset most of their expected electricity use, your home qualifies for the program.

HOPER requirements

Why is solar a required component of the program?

HOPER’s research focuses on reducing loan default risk. The #1 reason homeowners’ default is a lack of savings, especially in the first five years of purchasing the home.

Many new homeowners report having less than $1,000 in liquid savings, meaning any unexpected expense—a job loss, medical emergency, or car repair—can quickly put them at risk of missing mortgage payments.

man wearing safety glasses and gloves holding solar panels on the roof

Here’s how solar helps:

Immediate savings boost: Home buyers receive a 30% tax credit for their solar system, averaging $10,000-$12,000, which can be used to build an emergency fund. This equates to roughly 5-6 months of mortgage payments, providing a financial safety net in the crucial early years of home ownership.

Long-term affordability: Their electric bill is typically the second-largest home expense after the mortgage. By generating most of their electricity from solar, you lock in energy savings and protect yourself from rising utility rates over time. This makes home ownership more sustainable, reducing the risk of financial strain in the future.

How is the solar paid for?

FHA has made it seamless to include the cost of installing solar directly into your mortgage. This means:

  • The solar system is fully paid for on day one—no separate loan, no extra payments.
  • The cost is simply rolled into your mortgage, so you own the system outright.
  • You still benefit from solar incentives, including tax

What will happen to the monthly mortgage payment?

Mortgage bill and calculator

The borrower’s total housing expenses (mortgage + utilities) will remain roughly the same whether they participate in the HOPER program or not.

For example: if adding solar increases the mortgage by $200/month, their electricity bill will typically decrease by roughly the same amount, keeping the overall monthly costs stable.

Who installs the solar?

To ensure compliance with FHA guidelines and timelines, AHA (Attainable Housing Advocates) will get the buyer an energy assessment with a state-approved solar installer.

Once their home’s energy assessment is completed, AHA will provide a solar quote and breakdown of HOPER benefits, allowing them to make an informed decision.

In Conclusion

Do reach out to me for more on this incredible opportunity.  As a reminder, this is not a down payment assistance program, it’s earned income that can be utilized for a down payment or closing costs. 

Finally, the installed solar system is OWNED BY THE HOMEOWNER – there is no lien on the property whatsoever, so selling the home down the road becomes much easier.

The Lending Coach

Conventional and FHA Loan Limits for 2024

Fannie Mae-Freddie Mac picture

Every year, the both the Federal Housing Administration (FHA) and the Federal Housing Finance Agency (FHFA) adjusts the conforming mortgage limits based on home price growth.

FHFA logo

The agencies do this to keep pace with the market and to make sure buyers have access to the right levels of financing.

Conventional Limits

Starting January 1, 2024, new conventional loan limits will rise to $766,550 in most of the U.S. — with larger limits for high-cost areas.  These loan limits vary by county.

The agency announced a 5.56% increase to the borrowing ceiling of conventional mortgages. For one-unit properties, this amounts to a $40,350 jump from $726,200 in 2023 to $766,550 in 2024.

Loan Limits graphic

FHA Loan Limits

FHA loan limits are based on the Federal Housing Finance Agency’s conforming loan limits. Each year, FHA limits are set at 65% of the new conforming loan limits.

There’s not just one FHA loan limit. Rather, borrowers can access a wide range of loan sizes depending on the type of property they’re buying and where it’s located.

Loan Limits graphic

The Federal Housing Administration backs mortgages on 2-, 3-, and 4-unit properties. These types of homes have higher loan limits than single-family residences.

Although FHA allows multifamily home loans, the property must still be considered a “primary residence.” That means the home buyer needs to live in one of the units full time.

Contact Me

Do reach out to me to find out what the maximum loan limit is for a particular county, as it would be my pleasure to help!  And remember, if you decide to utilize a multi-unit property as a primary residence, low down-payment options are available!

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The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Debunking the Myth: You Don’t Need a 20% Down Payment for a Mortgage

Bags of Money in a Shopping Cart

The idea of needing a 20% down payment for a mortgage has long been fixed in the minds of prospective homebuyers. However, this traditional belief doesn’t hold true in today’s dynamic housing market.

House with Money

With evolving loan options and changing financial landscapes, it’s important to debunk the myth and explore the advantages of bringing in a small down payment when securing a home loan for a primary residence.

Accessibility and Affordability

Requiring a 20% down payment can be a big hurdle to homeownership for many. For first-time buyers or those with limited savings, this amount may be prohibitively high.

US Department of Housing and Urban Development Logo

Fortunately, many mortgage programs exist that allow for lower down payments, such as Federal Housing Administration (FHA) loans, which require as little as 3.5% down.

VA loans for those in our military and our veterans can require no down payments whatsoever!

These options make home ownership far more accessible and affordable for a broader range of would-be  buyers.  This provides new opportunities for individuals to enter the market and build equity.

For today’s most widely-used purchase mortgage programs, down payment minimum requirements are:

  • FHA Loan: 3.5% down payment minimum
  • VA Loan: No down payment required
  • HomeReady/Home Possible Conventional Loan (with PMI): 3%
  • Conventional Loan (with PMI): 5%
  • Conventional Loan (without PMI): 20% minimum
  • USDA Loan: No Down Payment required

PMI is “private mortgage insurance”…and you can find out more about that here…

You can also find out more on the specifics of multiple mortgage types here…

By allowing lower down payments, lenders offer more financial flexibility to aspiring homeowners. This means that you can become a homeowner sooner and start building equity in your own home right away!

Opportunity for Building Wealth

Rather than waiting until they accumulate a large down payment, individuals can enter the housing market sooner by utilizing mortgage programs with lower down payment requirements.

white paymaster ribbon writer adding machine placed on tabletop

This early entry enables homeowners to benefit from potential property appreciation, which can be a valuable source of wealth building over time.

By leveraging their down payment funds to secure a mortgage and invest in a property, individuals can start building equity and potentially generate significant returns in the long run.

Would-be borrowers can also utilize gifts from relatives for their down payment and closing costs.  Find out more on that here…

Flexibility and Financial Freedom

Money with Rope

Earmarking a significant portion of savings towards a down payment may leave homebuyers financially strained, limiting their flexibility and ability to handle unexpected expenses or invest in other areas.

Opting for a lower down payment allows buyers to retain more cash on hand, providing a financial safety net and allowing for future investments or potential home improvements.

This increased flexibility enhances financial freedom and offers peace of mind in managing homeownership-related expenses.

In Conclusion

person with keys for real estate

The belief that a 20% down payment is necessary for obtaining a mortgage is no longer an absolute truth.

While a larger down payment can offer certain advantages, such as lower monthly payments, it is essential to recognize the benefits of alternative mortgage programs with lower down payment requirements.

These options promote accessibility, affordability, and the opportunity for investment and wealth building. By understanding the evolving landscape of mortgage financing, prospective homebuyers can make informed decisions that align with their financial goals and aspirations. 

So please do reach out to me for more, as it would be my pleasure to help you structure your loan and down payment options.

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The “Self-Sufficiency Test” – a Unique FHA Regulation for 3-4 Unit Properties

Apartment Building

Are you looking to become a homeowner and build a long-term investment strategy at the same time? Purchasing a multi-unit property is a great way to accomplish exactly that.

Line of Houses with Red Roofs

For those wanting to buy a 3 to 4–unit property and are planning to use FHA financing, the property will need to pass the “FHA Self-Sufficiency Test” to qualify, if you plan on using expected rents as income.

Many people that invest in multi-family housing live in one of the units. So, this rule exists to make sure the property would still be self-sufficient if the borrower moves out. It requires lenders to compare the estimated rent generation and the expected mortgage payment.

The Basics of the FHA Self-Sufficiency Test

The FHA wants lenders to determine if the property being financed is what they consider “self-sufficient”. In other words, the monthly mortgage payment must be equal to or less than the total rent received.

Paper of Graphs with Pen and Calculator on Top

A property isn’t self-sufficient if the mortgage exceeds the amount of rent the borrower will receive. 

Additionally, the borrower must have three months’ worth of mortgage payments in savings for qualification purposes.

Again, this test only applies if the borrower is using expected rents as income on their mortgage application.

Passing the Self-Sufficiency Test

Let’s assume that a 3-unit complex has estimated total rents of $4,500/month based on the appraisal.

By regulation, the lender must now apply a 25% “vacancy factor” to that total rental figure, making the expected usable income $3,375 per month.

This $3,375 needs to be more than the estimated “all-in” mortgage payment, if the borrower is using expected rents on their application for qualification purposes.

US Department of Housing and Urban Development Logo

This all-in payment includes all taxes, insurance, mortgage insurance, and any HOA/community fees.

In order to pass the self-sufficiency test, you’ll need to know the net rental income for the property. You can obtain this number from an appraiser. This professional can determine the potential of the rent you can receive for the property according to the current market.

This test is one of the largest hurdles in qualifying for an FHA loan on a 3-4 unit property. Passing it means the home will pay for itself, assuming you receive the designated rent.

In Conclusion

I run these estimates upfront for my borrowers while they’re out shopping for properties to avoid any issues. When rates and prices are high, this FHA self-sufficiency rule can be a hindrance on someone’s ability to use FHA to buy a 3 or 4 unit property.

Thankfully, duplexes are excluded from this rule and conventional financing has some lower down-payment options available.

Please contact me directly to discuss your current situation and how you might be able to take advantage of an FHA loan for a multi-unit property.  It would be my pleasure to help you!

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2017 To Be A Breakout Year For FHA Buyers

The FHA mortgage was designed to help home shoppers with lower credit scores and a small amount of cash in the bank – and these loans have long been one of the most popular mortgage types available.

Per mortgage software firm Ellie Mae, approximately twenty percent of all mortgage applicants will opt for an FHA loan because of its buyer-friendly guidelines.

Thanks to recent policy changes within FHA, lenders could start approving more loans. Buyers could have a much easier time purchasing a home, and applicants who were previously turned down could receive an FHA mortgage approval in 2017.

Source: The Mortgage Reports

Lenders and the FHA In 2017

FHA’s new policy will benefit home buyers this year, albeit a bit indirectly.

Per Tim Lucas at The Mortgage Reports, lenders should become more lenient as they experience less scrutiny from FHA. In turn, mortgage banks and brokers could relax lending standards and approve more FHA buyers in 2017.

This should further increase access to FHA loans for the typical home buyer, in line with FHA’s core mission.

FHA, from its inception in 1934, has maintained flexible lending standards – as their goal is to promote homeownership among a population that would not qualify for other types of financing.

Guidelines are so lenient, in fact, that lenders usually set their own FHA lending standards that are much more strict.

For example, states Lucas, the FHA may allow the borrower to qualify with income received for less than two years. A lender can “overlay” a requirement that the borrower needs to be employed a full two years before approving the loan. By-the-book FHA guidelines would result in an approval.

He states that “lender created overlays to reduce risk that their loans will be subject to FHA penalties. Overlays won’t go away. But they could be diminished enough for a subset of borrowers to be approved even if they received a denial in the past.”

FHA Making It Easier To Qualify

The Federal Housing Administration (FHA) is a government agency that insures the loans, which in turn allows lenders to issue approvals with low downpayments and less-than-perfect credit scores.

But FHA will only insure a loan if it meets its standards.

Lenders approve loans imperfectly, sometimes missing the mark when it comes to FHA guidelines. Minor errors and mistakes make their way through the loan process.

States Lucas, “this is an unintended consequence for FHA. The organization’s mandate is to increase homeownership levels in the U.S. But loan refusals were the real-world effect, as lenders feared high penalties for mistakes.

To combat this, the FHA announced that it would not penalize lenders when loans went through with minor mistakes that had no bearing on loan approval.”

This takes a lot of pressure off of lenders. FHA’s goal is that lenders will be more willing to approve home buyers for FHA loans.

FHA Benefits and Their Appeal

FHA loans will continue to be a favorite among first-time home buyers. While the program is well-used by new buyers, applicants also use it to make a subsequent home purchase due to a move or after outgrowing their first home.

One advantage with an FHA loan is its lenient credit score requirements. Lenders genrally require a minimum score between 580 and 640 – and this is one of the lowest required scores among mortgage options.

Another draw to the FHA loan is its low required downpayment. As little as 3.5% down is required at closing.

FHA loans also tend to offer some of the lowest mortgage rates available. According to Ellie Mae, average mortgage rates on FHA loans are between 10 and 15 basis points (0.10% – 0.15%) lower than average rates on conventional loans.

FHA loans provide a unique set of benefits that are a perfect “fit” for a sizable portion of today’s home buyers. Contact me for more regarding FHA home loans!

The views expressed are my own and do not necessarily reflect those of American Financial Network, Inc.

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