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Agent TrainingFinancing & DPA training for real estate agents
Buydowns, concessions, CHFA and local down payment assistance, USDA and qualifying a buyer before the lender. 17 guides from Brian Lee Burke, team leader of The Kenna Group at Keller Williams DTC, licensed since 2003, each with the short answer, the steps and a script for your client.
3-2-1 Buydown Explained: How It Works, What It Costs and Who Pays3-2-1 buydown explained in one breath: the buyer's payment is figured at 3 points under the note rate in year one, 2 points under in year two and 1 point under in year three. Year four on, it's the full rate. Someone, usually the seller, pays the difference up front into an account the lender draws from.CHFA Programs Explained: Down Payment Assistance Grant vs Second MortgageCHFA grant vs second mortgage is the choice every CHFA buyer makes. Both pair with a CHFA first mortgage, and a buyer picks one, not both. The grant is smaller and never repaid. The second is larger, with no monthly payment, and is repaid at sale, refinance, payoff or move-out. CHFA notes higher rates apply.How do CHFA income and purchase price limits work, and how do I check them?Every CHFA program has an income limit. CHFA says the limits depend on the program, the county, household size, and whether the home is in a targeted area. Some programs have used one flat statewide number. Others, like FirstStep, change by county. CHFA posts the current tables on its income limits page, and the tables are tied to the date the loan is locked. On price, check whether the program caps the purchase price, the loan amount, or neither. Brian's published breakdown says CHFA's main programs have used a loan amount cap instead of a price cap. Confirm on the current matrix.How do Denver, Aurora and other local down payment programs work, and can they stack with CHFA?Local help comes from cities, counties, housing authorities and nonprofits. It may be a grant, a forgivable loan, a deferred loan, or a low-rate loan. Many local programs use stricter rules than the state programs: income limits based on a percentage of the area median income, counting everyone in the household, asset limits, price caps, and specific areas. Some local programs can sit behind a CHFA or metroDPA loan. Others can't. The lender and every program involved have to approve the stack. Before you say anything, check that the program is funded right now.How do I explain rent-to-own vs down payment assistance?Rent-to-own is a lease with an option to buy later. The tenant usually pays an option fee and sometimes extra rent toward a future down payment. If they can't get a loan when the option runs out, they can lose that money. Down payment assistance helps qualified buyers buy now, often with little cash. For a lot of rent-to-own leads, DPA is the faster, cheaper path. For some, rent-to-own or credit-building is the honest answer.How do I qualify a buyer before sending them to a lender?Desperate agents send everyone to the lender. That wastes the lender's time, burns your relationship with them, and embarrasses the buyer when they get turned down. Thorough agents ask first. They send the lender buyers who can close, and they help the rest get ready. Thorough means more closings.How do USDA no down payment loans work?The main program is the USDA Single Family Housing Guaranteed Loan. A private, USDA-approved lender makes the loan, and USDA guarantees part of it. The home must be in an eligible area on USDA's map. The household's income must be under the limit for that county and household size. The buyer must live in the home as their main home. USDA charges an upfront guarantee fee and an annual fee, which work a lot like mortgage insurance. USDA sets those fees and can change them. There's also a separate Direct loan program for lower-income buyers, run through USDA's local offices.How does CHFA Schools To Home work, and who qualifies?The buyer gets a fixed-rate CHFA first mortgage plus a second mortgage of up to 25% of the first mortgage amount, per CHFA's program page. There's no monthly payment on the second. It comes due at the end of the term or earlier if the owner sells, refinances, pays off the first mortgage, or stops living in the home. At that point the owner repays the help plus a percentage of the appreciation. CHFA requires a special course, "Understanding Your Financial Commitment," on top of the regular homebuyer class. Full details are on CHFA's Schools To Home page.How does down payment assistance work, and who qualifies?A lot of renters think they need 20% down. They don't. Many loans need 3% to 3.5%. DPA can cover most or all of that. The buyer still needs a credit score that works, steady income, and usually a little cash. The lender runs the numbers and picks the program. Your job is to qualify the buyer first, then connect them to a lender who does DPA every week.Rate Buydown vs Price Cut: Which Saves Your Buyer More?Rate buydown vs price cut: the same seller dollars usually lower the monthly payment more as a buydown than as a price drop. A price cut shrinks the loan a little. A buydown lowers the rate, or the early payments. A price cut wins when the appraisal is tight, the buyer pays off fast, or taxes follow price.Seller Concessions Explained: What They Cover, Loan Limits and How to Ask for ThemSeller concessions explained in one line: money the seller agrees to pay toward the buyer's costs at closing. They can cover closing costs, prepaid taxes and insurance, and a rate buydown. They usually can't cover the down payment, and every loan type caps them. The buyer brings less cash; the seller nets less.What is CHFA FirstStep, and how do CHFA and FHA work together on a HUD home?FirstStep is a CHFA first mortgage written as a standard FHA purchase loan. The "Plus" version adds CHFA down payment help. The buyer must meet CHFA's rules (credit floor, income limit, homebuyer class, a small contribution of their own money) and FHA's rules (the home must pass an FHA appraisal). On a HUD home, the listing's financing code decides whether FHA can work at all. If it can, CHFA help can cover down payment or closing costs, and HUD's $100 down incentive may apply on listings that carry it.What is CHFA Preferred, and when does a conventional CHFA loan make sense?Preferred is a CHFA first mortgage written as a 30-year fixed conventional loan by a CHFA participating lender. The "Plus" version adds CHFA's down payment help, usually as a deferred second mortgage. It tends to fit buyers with stronger credit, because conventional mortgage insurance is priced by credit score. Buyers with weaker credit often do better with FHA through CHFA SmartStep. The lender runs both and shows the buyer the monthly cost side by side.What is CHFA SmartStep, and which buyers is it for?SmartStep is a CHFA first mortgage. CHFA doesn't lend the money itself. A CHFA participating lender writes the loan under CHFA's rules. The buyer can pair it with CHFA down payment help, either a grant or a deferred second mortgage. The version with help attached is usually called SmartStep Plus. The buyer still needs a credit score that meets CHFA's floor, income under CHFA's limit, a CHFA-approved homebuyer class, and a small amount of their own money. Then the normal FHA, VA or USDA rules apply on top.What is metroDPA, and how is it different from CHFA?With metroDPA, a participating lender writes a 30-year fixed loan (FHA, VA, USDA or conventional). The buyer can add help equal to a percentage of the loan amount. The help is a zero-percent second mortgage with no scheduled payments. It can go toward the down payment, closing costs, prepaids or lowering the loan balance. There's no first-time buyer rule, repeat buyers are welcome, and the program site says it has no purchase price limit. Brian's posts describe the help as forgiven after the buyer stays in the home for a set time. Ask the lender for the current forgiveness and repayment terms. Start at metrodpa.org.What should real estate agents never say about mortgages?Never quote a rate, points or payment. Never promise approval or a program. Never tell someone to pay off, close or move money. Ask the seven questions, note the answers, and connect them with a lender.When should my buyer lock their mortgage rate?Most buyers lock after they're under contract on a specific home, for a period long enough to cover the closing date with a little cushion. Common lock lengths are 30, 45 or 60 days. Longer locks can cost more. If closing slips past the lock, the lender may charge an extension fee or reprice the loan. Nobody can predict rates. The buyer and lender choose when to lock. Your job is to keep the dates tight and tell the lender the moment anything changes.
