Land Home Financial Services rolls out zero down payment mortgages

Lender will gift borrowers 5% to be used for down payment, closing costs

In the last few years, several lenders unveiled ultra-low down payment mortgages, with some requiring no down payment from certain borrowers.

Fannie Mae and Freddie Mac spurred the movement by beginning to buy loans that only required borrowers to put down 3% back in 2014.

Since then, Bank of AmericaWells FargoJPMorgan Chase, and other major lenders began offering loans with 97% loan-to-value ratio.

But other lenders went even further in an attempt to serve borrowers who may not have the 3% required for the Fannie and Freddie loan programs.

Quicken Loans and Guaranteed Rate each came out with 1% down mortgages with the remaining 2% coming via grants. Then, Fifth Third Mortgage took it a step further and announced a zero down payment mortgage program.

Earlier this month, Movement Mortgage joined Fifth Third in offering zero down mortgages.

Now, another lender is rolling out a zero down payment mortgage of its own – Land Home Financial Services.

Land Home’s program isn’t solely a zero down payment mortgage though. The program, called House2Home, is a “suite of down payment assistance and educational programs aimed at helping prospective first-time and repeat homebuyers achieve the dream of homeownership.”

According to the California-based company, House2Home is a suite of community grant programs that provide down payment assistance to borrowers in the form of a gift of up to 5% of the loan amount.

The company notes that the gift amount is completely forgiven immediately, therefore the borrower is not required to repay the gift amount.

According to details provided by the company, the gift amount doesn’t necessarily need to be used for a down payment. The money can be used for closing costs as well – or in some cases, the gift money can be used for a down payment and closing costs as well.

Here’s one example of how the program works, as provided by Land Home to HousingWire: There is a 1.5% origination fee charged for this product offering, so a net 3.5% of the gift amount can be used to meet the agency required 3% down payment contribution, with the remaining .5% going towards the borrower’s closing costs.

According to the company, House2Home is available for all product type: Federal Housing Administration loans, Department of Veterans Affairs loans, Department of Agriculture loans, and conventional loan programs.

The program is also only for purchase first lien mortgages for buyers on their primary residence.

The program is “geared to accommodate the financing most suitable based on borrower needs and requirements,” and eligibility is determined by median income levels, the company said.

“Owning a home has long been a pillar in the proverbial American Dream,” Brad Waite, Land Home’s president and CEO, said. “At Land Home, we understand the need to create, package, and deliver assistance programs that make that dream a reality for all who are able and willing.”

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