Tag Lending Group Blog: Expert Mortgage Solutions & Insights

Introducing the 1% Giveback and 0% Down Program: Redefining Real Estate Financing

Written by Shane Compala | Jun 21, 2024 2:30:33 PM

Buying a home is a dream for many, but the financial hurdles can be daunting. Enter the 1% Giveback and 0% Down Program – innovative solutions designed to make homeownership more accessible. These programs, offered by Tag Lending Group (TLG), can significantly reduce the upfront costs associated with buying a home. Let’s dive into how these programs work, their eligibility requirements, and the opportunities they present for leveraging home financing.

How the 1% Giveback Program Works

  • The 1% Giveback Program offers a lender credit of up to 1% of the loan amount for closing costs or interest rate reduction, easing financial burdens for prospective homeowners. For a $300,000 loan, this means up to $3,000 covered, reducing out-of-pocket expenses or monthly payments. This flexibility allows borrowers to customize benefits to their financial needs.

Eligibility Requirements

To qualify for the 1% Giveback Program, borrowers must meet certain criteria. Here’s a quick rundown:

  • Credit Score: Minimum 620
  • Property Types: Single-family homes, condos, townhouses, etc.
  • Debt-to-Income Ratio: Front-end 45%, back-end 50%
  • Loan Types: Conventional, FHA, VA, Jumbo Loans
  • Homeownership Status: Borrowers do not need to be first-time homebuyers

Leveraging Opportunities with the 1% Giveback Program

  • Getting pre-approved and closing your loan with one of TLG’s preferred lenders opens up even more opportunities. For instance, borrowers can receive a lender credit at closing for up to 1% of the loan amount, which can significantly reduce the financial strain of closing costs.

Understanding the 0% Down Program

  • The 0% Down Program is designed for those who might struggle to save for a down payment. It eliminates the need for an upfront down payment by providing a second lien mortgage for 3% or 5% of the purchase price, up to $15,000. This second lien has no monthly payments and no interest, making it an incredibly attractive option for cash-strapped buyers.

How It Works

The 0% Down Program involves two key components:

  • First Lien Mortgage: Meets Loan-to-Value (LTV) requirements.
  • Second Lien Mortgage: Provides 3% or 5% of the purchase price, up to $15,000, with no monthly payment requirement and no interest.

The balance of the second lien is due when the first lien loan is refinanced or paid off. Borrowers can make payments on the second lien throughout the loan term, but it's not mandatory, offering flexibility and financial relief.

Qualifying for the 0% Down Program

To take advantage of the 0% Down Program, borrowers must meet specific qualifications:

  • Income: At or below 80% of the Area Median Income (AMI) for the property’s location.
  • Credit Score: Minimum 620, with higher flexibility for very-low-income borrowers.
  • LTV: Must be equal to or greater than 95%, up to 97%.

For first-time homebuyers, defined as individuals who have not owned a home in the past three years, the program offers additional leniency with credit scores and LTV requirements.

Home Financing Offer for Deepak I

  • Purchase Price: $785,000
  • Interest Rate: 6.625%
  • Credit Score: 740
  • Lower MI: 0.26% (compared to 0.45% for FHA MIP at 0.55%)
  • Second Lien: $15,000
  • Seller's Concession: 2% = $15,700
  • Earnest Money Deposit (EMD): $10,000
  • Cash to Close: Approximately $21,000 - $22,000 (after adjustments)

This example shows the significant cost savings and reduced cash-to-close requirements made possible through the Zero Down Program.

Conclusion: Making Homeownership Attainable

  • The 1% Giveback and 0% Down Programs offered by Tag Lending Group are designed to make homeownership more accessible by reducing upfront costs and easing financial burdens. Whether through covering closing costs, lowering interest rates, or eliminating down payment requirements, these programs provide valuable support to prospective homebuyers.
  • For real estate professionals, these programs offer a compelling value proposition to clients, helping more people achieve their dream of owning a home. By leveraging these opportunities, realtors can expand their client base and close more deals, fostering a win-win scenario for all parties involved.