100% LOAN 0% DOWN PAYMENT USING AN FHA LOAN 2024 | FHA Loan Secret

what if I could show you a way to buy a 300 000 home with only a thousand dollars I mean your primary home that you would live in your total cash to close at signing including your down payment all your closing costs and including all funding of all your escrow accounts a total of one thousand dollars would that be interesting to you if so let's kick off this Rodeo right now hi folks I'm Kevin Fagan I'm the mortgage Patriot here in Central Texas above San Antonio nestled in the Hill Country uh serving proud Texans all across our state and of course homeowners all across the country so today I'm very excited because we're going to talk about a very important topic it's down payment because most of the time FICO scores are good enough or I can get them to a point where they're good enough and then income if they have a job at all or and they're combining income certainly they typically have enough for a start at home or a first home so really the element that causes most problems is the down payment element because a lot of times you have to come out of pocket for ten thousand fifteen thousand twenty thousand at the least certainly for a 300 000 property but in our video we're going to talk about a way to buy a 300 000 home and with the down payment and total closing costs and total escrow accounts to fund we're going to get that number down to one thousand dollars how we're going to do that we're gonna combine about three strategies but the base of our strategy the loan product is going to be an FHA loan which virtually everyone could qualify for so stay tuned and let's get into it right now so as we start if you can hit the like And subscribe button below that really helps me and it helps you my goal is to bring videos about a one a week of very informative actionable content so that you can rely on me as a as a trusted financing source it's someone that can help you whether you're an investor or whether it's the homeowner whether you're purchasing or just refinancing there'll be a lot of good content and there already is so looking at the library of of my YouTube videos already but the goal is to continue to build that library and just bring good content to you going forward that can help you either make money as an investor or save money as a homeowner trying to refinance or purchase so we're starting this strategy off with the notion of cash to close cash to close is the actual number that you're going to have to write a check for or wire money to the title company for the purchase of a home and that cash to close includes three major components one of those components number one is down payment number two is the actual cost the hard cost of actually doing the financing or the transaction and then lastly the escrow funding we're going to get break down all those three right away so let's talk about down payment so unless you're buying a home with cash or you're a veteran that enjoys a 100 VA loan or you live in the rural areas and you are allowed a USDA loan most people aren't on either of those two you're going to have to come out of pocket for a down payment with your financing and what does that mean that means the down payment is the percentage that you come out of pocket for relative to your purchase price a conventional loan setting can get as low as five percent in some cases you can actually get down to three percent if your median income is below the median income for that area for today's discussion we're going to talk about the FHA loan which is very popular entry loan usually first-time home buyers or second time home buyers use the advantages of an FHA loan one of the big Advantage is a low down payment so FHA allows you to do three and a half percent down so let's take our three hundred thousand dollar example that we're going to be talking about all through this video on a 300 000 house you're allowed to put down only three and a half percent using an FHA loan three and a half percent of three hundred thousand dollars is ten thousand five hundred dollars so the down payment is the first component of the cash to close concept that we've talked about the second component is the actual real cost the total cost of actually doing the transaction so it doesn't matter what type of loan you do in convention FHA via USDA they all have costs associated with it and what are those costs let's talk about those now and there's plenty of them trust me there are underwriting costs appraisal costs processing fees title costs and then recording costs and maybe surveys and inspection costs the costs come out of the woodwork when you get when you go to close they're going to give you a a closing statement it looks like a laundry list of just a half a dozen to a dozen different charges that you're going to receive those add up to quite a bit so that's also the big component of cash to close is the actual true cost of doing a loan so how much will all those cost approximate well the answer is going to be different in every state but let me just give you the state of Texas anyway on a 300 000 home purchase fees are going to be across all those ones that I mentioned underwriting processing appraisal survey inspection title work recording and so forth that's going to approximate about five thousand to six thousand dollars so it's not cheap so where do we stand now on cash to close we talked about the down payment being ten thousand five hundred dollars and we talked about closing costs being five to six let's call them six so we're up to sixteen thousand five hundred dollars just on the first two components of the cash to close concept let's talk about the last one the last one is escrows what is that and this is the one that everybody forgets when you buy a home you're responsible for property taxes and property insurance right you can pay those separately outside the mortgage but that's rare but you're allowed to do that but most the time you make a payment to the mortgage company it's just doesn't just include your mortgage payment which is your principal and interest it also includes property taxes and property insurance so those two components the property tax and property interest go into a called an escrow account where your servicer your mortgage company is holding at as an aside to at the end of the year pay property taxes and then fund the new 12-month commitment to uh your insurance so but at closing you have to pre-fund those two components a little bit so you have to pre-fund your insurance a full 12 month payment at closing so let's say it cost you 100 a month for property insurance so now you're going to pay an additional twelve hundred dollars at closing to fund the first year of your property insurance also your property tax let's say your taxes are 300 a month you have to fund the escrow to the tune of about four months so let's say that's another twelve hundred dollars of escrows for property taxes so 1200 and 1200 that's another twenty four hundred dollars of cash to close so now we're at sixteen thousand five hundred plus twenty four hundred that gets you to eighteen thousand nine hundred dollars so your cash to close and on a three hundred thousand dollar house in Texas is going to be around nineteen thousand dollars in our in our example eighteen thousand nine hundred dollars so how on Earth are we going to get this down to a thousand dollars I'm going to show you that right now we get down to that thousand dollar figure by combining two different strategies and they are down payment assistance and seller concessions down payment assistance I've done a video on this before you might check that out it's it's pretty helpful I think it but we talk about down payment assistance programs are different all across the country because they have National programs they have state programs they have County they have City programs and they all vary but the one I'm referring to now is a specific program it's a national program and what is it going to do it's going to allow you to get a loan on that three and a half percent down FHA product so in other words you get an FHA loan for three and your the down payment on FHA Loans three and a half percent but rather than pay that ten and a half thousand dollars you're going to get a second lien loan for that ten thousand five hundred dollars this down payment assistance program is going to give you a loan for that three and a half percent so what does that look like well it's it's a small loan because it's only ten and a half thousand dollars and it's spread over that entire 30-year period so your payment is uh and today's race is going to be about eighty dollars is all so eighty dollars adds to your mortgage payment but now you've come to the table with zero down payment 96.5 FHA loan and a three and a half percent second lean down payment assistance loan so now we've shown you how to cover the down payment component of cash to close by using a down payment assistance loan it's a second lane position and doesn't add much to your payment but now you come out that entire ten thousand five hundred dollars in our example has been eliminated so now we have to put our focus on the total cost of the loan and the escrow costs which in our example are are eight thousand four hundred dollars how do we get rid of that or virtually get rid of that and the answer is seller concessions what are seller concessions seller concessions are closing costs that the selling party has agreed that they will cover instead of you what does that even mean why would they do that because in most environments and we're in an environment now where the housing market is not this most of the houses aren't flying off the shelf yes in some places they are but at least the state of Texas is a relatively balanced Market it's on a normal home the seller would rather help you cover closing costs to sell their home than reduce his price so let's say again that that house is for sale for three hundred thousand dollars you want to buy it but rather then go to the seller and say hey I'll buy this from you for 290 000 and take ten thousand dollars off the seller would rather say I'll sell it to you for 300. let's keep that number at 300 and I'll give you seven thousand four hundred dollars of seller concessions to cover your closing costs so in this example the seller is actually getting a better deal than selling it to you for 290 000 because effectively they're selling it to you for 292 600 dollars where did I get that map because that is 300 000 minus the closing cost he's going to concede to you or the concessions he's going to give to you of seven thousand four hundred that leaves a true cost a true net to the selling party of two ninety two six and just so you know these are very normal transaction I'd say I do quite a bit of transactions and most of the time I'd say probably 90 of the time in this environment that I've seen in this year you're seeing seller concessions and and they are sometimes very substantial you can see them all the way as low as a thousand dollars all the way up to maybe fifteen thousand dollars of seller concessions so our example here was seventy four hundred dollars is not out of the realm at all so now let's look at what we've done we've covered your down payment of three and a half percent with a second lien position from a down payment assistance program so the ten and a half thousand dollars has been eliminated and we had eighty four hundred dollars of seller of true costs and escrow cost that we needed to cover well we covered seven thousand four hundred of those from a seller concession idea that I just presented to you so what does that leave us with of course a thousand dollars to close so there's your cash to close of a thousand dollars where you're literally only writing a check for a thousand dollars on a cash to close total that would have been close to nineteen thousand dollars so this happens all the time I can help you structure this and help you negotiate this but it starts with an FHA loan and attaching a down payment assistance loan to that and then also adding that last component of seller concessions so I hope this was helpful you look at my phone number there give me a call at the 210-317-6514 number and again like And subscribe if you would please but give me a shout I'd love to talk to you and I'm Kevin Fagan the mortgage Patriot on your side bye-bye all right END OF TRANSCRIPT