How to Purchase a Home for Less Than $1,000!!!
Ok, I’m not going to beat around the bush here. You clicked on this blog for a reason and that’s to find out how exactly you can purchase a home for less than $1,000. I know that sounds impossible, but I promise you that it is possible, and that’s because of MMP, which stands for the Maryland Mortgage Program.
MMP is designed to help Maryland residents achieve homeownership by providing various mortgage products. The one I’ll be going over with you is called the 1st Time Advantage 5% Loan, which provides buyers with 5% of the loan amount to help pay for their downpayment and closing costs. For example, if you’re borrowing $200,000 to purchase a home, then you’ll receive $10,000 in down payment and closing cost assistance. MMP even offers up to 6% in down payment and closing cost assistance, but that’s only for buyers who make less than 50% of the median income in the area the home is located in. This money that MMP provides acts as a 0% deferred loan, meaning that buyers don’t have to pay back this money until they either sell the home or refinance their loan, and they don’t have to pay any interest on it.
Now that you know what makes MMP such a wonderful program for Marylanders who are looking to buy a home, let’s go over some of the main requirements you’ll have to meet to qualify for the 1st Time Advantage 5% Loan.
#1: You’ll have to be a first-time homebuyer, which MMP classifies as someone who has not owned a home in the past three years. This doesn’t apply if you’re purchasing a home in a targeted area. You can use this website to find out if a home is located in a targeted area: https://portal.dhcd.state.md.us/GIS/MMP/index.html
#2: You’re required to have at least a 640 credit score. Don’t worry if you don’t meet the credit requirement. If you get in contact with a lender they can help you come up with a game plan for how you’re going to get your credit score up.
#3: The maximum debt-to-income ratio is 50%. If your debt-to-income ratio is close to that, you’ll need to have at least a 680 credit score. For example, if your gross monthly income is $5,000 and your mortgage payment and all your other debts are $2,500 a month, then your debt-to-income ratio is 50%.
#4: Your household income can’t exceed the limit that MMP has set depending on which county the home is located in and how many people are in your household. Here’s a sheet that has the income limits for all the counties: https://mmp.maryland.gov/Lenders/Documents/income-and-purchase-limits.pdf
#5: The home that you’re purchasing must be your primary residence, and you can’t own any other homes.
#6: MMP won’t be giving out money to people who are balling out, so if you have more than 20% of the purchase price in liquid assets, then sorry, MMP is not for you.
That’s pretty much all of the main requirements you have to meet to qualify for this program. If you would like more information on these requirements I can get you in contact with a lender or you can visit MMP’s website: https://mmp.maryland.gov/Pages/Eligibility.aspx
Now that I’ve gone over all of the requirements, let me give you an example of how you can use this program to purchase a home for less than $1,000 which is something a few of my buyers have been able to do.
In this example, let’s say you’re purchasing a home in Harford County for $250,000. If you’re using a conventional loan, you only have to put down 3% of the purchase price. You can expect your closing costs to be around 5% of the purchase price. So between the down payment and closing costs, you’ll have to bring $20,000 to the table…ouch!
Now before you freak out, remember that MMP provides you with up to 6% in down payment and closing cost assistance if the home is located in a targeted area. But in this example, let’s say that it isn’t. So that means you’ll be able to get up to 5% in down payment and closing cost assistance, which is $12,125 for this home.
Now you only have to bring $7,875 to the table, but that’s still not less than $1,000. Fortunately, you have the ability to ask the seller for concessions, which is money the seller provides you with from the proceeds of selling their home and is used to help pay for your down payment and closing costs. Sellers usually aren’t eager to provide you with concessions because it’s money coming out of their pocket and in this competitive market a lot of buyers aren’t asking sellers for any concessions to make their offer stronger. But if you’re able to find a home that’s been sitting on the market for a while, it can be the perfect home for you to try to get concessions from the seller.
For a conventional loan, you’re allowed to ask for up to 3% of the purchase price in concessions. So the most you’d be able to ask for in concessions for this home is $7,500. If you have a wonderful realtor like me who is able to help you get that much in concessions, then now you only have to bring $375 to the table!!!
So there you go, that’s how you’re able to buy a home for less than $1,000. Again, I know this seems like it’s impossible, but if you’re working with a realtor and lender who knows what they’re doing, then you’ll have a better chance of buying a home for less than what it would cost you to move into a rental. If you’ve been wanting to buy a home, but didn’t think you had enough money saved up, then what are you waiting for? Reach out to me now so that we can get the ball rolling!
