580 Credit score Mortgage Loan

New Down Payment Assistance Program - 580 Credit score

1. Low Credit Score Requirement: You can qualify with a credit score as low as 580.
2. Assistance Amount: Offers 3.5% to 5% towards your home purchase, making it possible to have a 0% down payment.
3. No Income Limit: Unlike other programs, there’s no income cap—you can earn more and still qualify.
4. You can even buy down your interest rate, with most down payment assistance programs they don’t allow you to do this which will help lower your monthly payment.

How It Works:
• The assistance is provided as a second loan (“2nd lien”) with a 10-year term.
• This second loan has an interest rate 2% higher than the current market rate.
• For example, if today’s market rate is 6.5%, the second loan rate will be 8.5%.
• You’ll have two loans: the first for the majority of the home’s cost and the second for the down payment assistance.

Example:
• Home Price: $250,000
• Using a 3.5% Grant: $8,750 (Second Loan)
• Second loan monthly payment: $184.87

Estimated Cash to Close:
• With the grant covering your down payment and the agent (me) negotiating $5,000 in seller concessions, this amount can be applied toward closing costs.
• Closing costs are typically 2-3% of the home price.
• Example: $250,000 x 2.5% = $6,250 estimated closing costs
• After $5,000 seller concessions, estimated cash to close is only $1,250.

First Loan Monthly Payment:
• Loan amount: $241,250 (after 3.5% grant)
• Interest rate: 6.5% (example market rate)
• Estimated monthly payment (principal & interest only): $1,526

Total Monthly Payments:
• First loan: $1,526
• Second loan: $184.87
• Total: $1,710.87
- This is an example and we won’t know exactly what it is because we don’t know what home we help you buy and what price that will be so this is a case by case basis.

You can refinance later to potentially lower payments when interest rates drop.

Priscilla Gallegos
Sierra Vista Realty LLC
Pricilla@PSHTeam.com