How I Bought My House With Very Little Of My Own Money
Published on - December 30th, 2006 (by J.D. Roth) Susan at +amateur christian+ has some advice for first-time homebuyers — spend some time to search for grants, and you might be able to get into a home without spending a fortune.
Two years ago I closed escrow on my very first home purchase. I did it with almost no money of my own, thanks to some free money programs I qualified for. Some friends have been showing interest in doing the same thing, so I thought I’d share my story with others.
The Home$tart program pretty much financed my downpayment. It’s a Federal program funded thru the Federal Home Loan Bank of Seattle. It is a grant — in other words, free money. They matched $3 for every dollar I had in savings up to a total grant of $5,000. I somehow managed to scrape together $1666, and they gave me $5000.
They have a set amount of grants available each year. You can enroll now — they give you an entire year to find and buy a house. If you’re in Portland, for example, you will need to apply thru the Albina Community Bank. (If they are out of grants by the time you start looking, you may want to wait until the beginning of the following year.) Your combined income must be below a certain percentage of the local median (80% in Portland), and you must attend a one-day class on homebuying and homeownership.
My closing costs and my super low interest rate were covered by the Oregon State Bond program. Basically if you’re again in that same income bracket, they’ll give you a below market rate (currently 5.25%) which saves you money and means you can buy more house than you could afford otherwise, or you can pay a slightly higher (yet still below market) rate (5.9%) and they will give you the equivalent of up to 4% of your loan amount to cover your closing costs. I found a cute little bungalow (a 1922 kit house) for $139,000 and they gave me the $4,073.07 I needed to pay for all the points, fees, appraisals, etc. that it takes to buy a mortgage.
All told, I got a lower rate than anybody else could get and $9,073.07 of free money. Woot!
Home$tart is a program provided by the Federal Home Loan Banks, “an essential source of stable, low-cost funds to financial institutions for home mortgage, small business, rural and agricultural loans. With their members, the FHLBanks represent the largest source of home mortgage and community credit.” For more information, or for a list of participating institutions near you, visit their web site.
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Great tips! Thank you so much. That is a very wondeful program.
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Thanks a lot, just so happens that I live in Portland, so this information really helps out. Thanks!
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Wow, kind of wish I knew about these programs before I bought a house!
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Some great info. According to the Atlanta Branch they have upped the amount you can receive to $10,000 (so you put it $3,333.33, get $10k). The only catch is you can’t put more than $10,000 cash down on your house. I’m guessing that is in addition to the money they give you? So would you be able to put down $20k ($10k from them, $10k from you) like this: ($3,333.33) + (3,333.33 x 3) + (10,000 – 3,333.33) = $19,999.99… or ($3,333.33) + (3,333.33 x 3) + 10k = $23,333.32?
Anyone know if there is a listing of other state bond programs out there?
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“All told, I got a lower rate than anybody else could get and $9,073.07 of free money. Woot!”
What you really meant to say was
“…$9,073.07 of other people’s hard-earned money! Woot!”
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Kevin, here’s a list of state housing finance agencies, which is where the bond programs are run: http://www.ncsha.org/section.cfm/4/39/187
These are indeed fantastic programs, and I wouldn’t bat an eyelash at someone in a low income bracket using “other people’s hard earned money” to buy a home, i.e., to contribute property taxes, improve property values, and stabilize the community).
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If somebody is not able to save more than $1666 he/she shouldn’t be allowed to buy a house.
I wouldn’t bat an eyelash at someone in a low income bracket using “other people’s hard earned money” to buy a home, i.e., to contribute property taxes, improve property values, and stabilize the community).
So the person was not able to save more than $1666 but he/she will be responsible with paying taxes, mortgage and etc. And something like improved property values and stabilization of the community – what a joke! The whole US society is based on a fake feeling of the wealth – oh yes, people who don’t know how to take care of their very own finances will be stabilizing the community and improve property values. Bwaaahahahaaahahah!
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I think it’s rather harsh to say you don’t think they can contribute to a community because they need assistance with their first house – my wife and I are looking for our first house, and with my student loan payments any assistance is a godsend.
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These programs, very similar to federal/local first-time homebuyers assistance programs are great, but highlight a problem of being median or slightly-above-media middle class: higher taxes plus none of the benefits that you would have gotten had you made a couple of thousand less the year before. Just passing that ’80% of median’ mark means that someone making less money than you will have substantially more effective funds for purchasing a home.
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Just finding a home in Portland for $139k is impressive in iteself. There are a lot of crappy houses for sale around me that cost over $250k. What area did you find your house in?
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Thanks for the tips, we are learning how to do this along the way.
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Great post! Thanks for the link. I might be above the liquid assets levels that Michigan allows, but thanks for the advice.
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I also heard about http://www.acornhousing.org/index.php
It looks like a good place to go but I have not personally used it. If you don’t qualify for 75% of median income, this allows for around $80K, at least in Portland.
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