As might be expected, many declined loans that could be saved with down payment assistance were declined because of a lack of cash-to-close. The runner-up category was debt-to-income. Now, it\u2019s probably obvious how a down payment assistance program can help save a loan that\u2019s primarily lacking cash to close\u2014it\u2019s the goal of a down payment assistance program to offer additional funds, after all. But how does down payment assistance help save a file that was declined primarily because of a high DTI?<\/p>\n
Many down payment assistance programs allow borrowers to provide funds in addition to what the program provides in order to make a larger down payment. For loan files where the borrower can already afford the minimum down payment and closing costs, forgivable, grant, and deferred payment down payment assistance is a convenient way to put more funds on the table without adding an additional loan payment, thereby lowering the LTV and mortgage monthly payment. Per DPR\u2019s data, the down payment assistance available now could reduce declined loan LTVs by an average of 5.85%, which goes a long way to make a loan recoverable. Per DPR, \u201cThe large share of loans potentially recoverable with homebuyer assistance highlights a significant, low-cost opportunity for lenders to increase purchase volume.\u201d<\/p>\n
Unfortunately, not every lending company (and loan officer) has the time and energy to apply for and memorize the requirements of 10 or more down payment assistance programs, even though doing so could save many declined loan files. Fortunately, CBC Mortgage Agency provides a solution!<\/p>\n
The Chenoa Fund down payment assistance program, provides forgivable and repayable loans in every US state (except for New York) with the same guidelines in every state. That\u2019s right, lenders can apply to become correspondents of Chenoa Fund and only have to learn one set of simple guidelines to offer Chenoa Fund across the US. Chenoa Fund is also a borrower-friendly program, accepting credit scores as low as 600 and DTI ratios that meet AUS requirements, as well as accepting manually underwritten loans. Borrowers can receive up to 5% down payment assistance, and borrowers that choose to add personal funds on top of that can get LTVs for their loans as low as 90%. Chenoa Fund hits it all\u2014nationwide accessibility, simple requirements, and increased buying power and flexibility for the borrower.<\/p>\n
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