Finding a loan for those amazingly affordable Dayton homes

You probably already know that one of the perks of living in Dayton is home prices that are the envy of the rest of the country. And I’m sure you know that people are beginning to move back into the city of Dayton. All good news so far. The stats I pull from the Dayton Area Board of Realtors MLS puts the median home price in the city of Dayton this year at right about $40,000. This sounds good on paper, but buying a lower priced home isn’t always as easy as you might think. picket-fences-349713_1280Some lenders don’t really want to mess with a loan that small, and some lenders simply won’t do it. In addition, Dayton has aging housing stock, and older homes need love. Smaller loans and distressed homes can be a double whammy for buyers. But never fear- you do have some options, and I’m here to share them with you!

There are several city or county-specific programs that can help you. These programs can change often so you will need to plan ahead and be prepared to move quickly when a home is available. The City of Dayton has a down payment assistance program for qualified buyers, as does the City of Kettering. If you want to take advantage of these programs, you have to be prepared well in advance. The Montgomery County Land Bank is another option that offers homes to qualified buyers only (full disclosure: MCLB is a client). The land bank homes are great candidates for the FHA 203k loan, details on that below, so if you are thinking about a MCLB home, talk to a lender who has 203k experience now, and find a Realtor who will either keep you apprised of the market, or plug you into their MLS search to update you as soon as a qualified home comes on the market. Competition for these homes and programs can be stiff so time is of the essence. The last MCLB home was listed and went under contract within a few days.

Other options include USDA loans and revitalization programs, one is targeted to rural areas and the other to urban, but both programs are designed to get qualified home buyers into homes with little or no down payment. Again, there are very specific qualifications and stipulations to these loans so talking with a lender who is familiar with these programs is going to be crucial to a successful purchase, but you can find out a more house-835877_1280about the rural USDA program here. And for neighborhoods within HUD revitalization areas, if you are a law enforcement officer, pre-Kindergarten through 12th grade teacher, firefighter, or emergency medical technician, HUD knows you are vital to community stability and offers a special Good Neighbor Next Door Sales Program for those professionals, find details here.

In order to take advantage of as many options as possible, shop aggressively for a lender, and consider working with a mortgage broker, who may have a wider variety of loan programs available, or a local credit union who has a vested interest in the community. Find a lender who can match not only your financial qualifications for a loan, but can take into consideration the location and type of home you are considering and offer loans based on those criteria as well. You want a lender who understands the important role home ownership can play in stabilizing a neighborhood. As lender Jerry Stewart at AmeriFirst says.

“Lower priced homes provide an onramp into the market and give sellers of these homes the opportunity to move up in size or amenities. Renovation financing, especially in the lower priced bracket, not only gives the buyer a more functional home but a more stable homeownership experience.  The consequences of stable homeownership flow through an entire neighborhood not only stabilizing values but encouraging others to improve and maintain their structures.  Real estate is not nearly as compartmentalized as it is lead to be believed and the more our industry can do to open the door to affordable, stable and efficient homes the better the health of the entire system.”

Jerry works with FHA 203(k) or 203(b) loans. This loan can be particularly useful for affordable homes that are in disrepair. When you buy a home, not only do you have to qualify for a loan, but the home itself also has to house-1407562_1280qualify for the particular loan you are looking at. You can’t get around this, both you and the home have to qualify for that same loan and with a traditional FHA loan, the home needs to be in good condition. What happens if the home needs work, as many affordable homes do? The FHA 203k loan might be for you.  As the name implies, this is an FHA loan, so you have the same low down payment as a straight FHA loan, but with a 203k loan, the home can be in disrepair, greatly expanding the pool of homes that buyer can now consider. Think of the 203k program as a remodel loan. The buyer is financing not only the purchase price, but also the cost of remodeling. There are requirements and stipulations of course, more than we can discuss in this post, but the 203k loan is a fantastic way to get into a home with a low down payment, and have renovations financed at the same time.

Getting a loan on an affordable home is possible in Dayton, if you think creatively and know where to look. There are loans and programs out there, but with all things real estate, information and advanced planning in the key to owning a home of your own.

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