NSP down payment assistance is limited to 50% of the lender required percentage. For example, if a buyer is using FHA financing, the down payment required is 3.5% of the purchase price. On a $200,000 home, the down payment is $7000. NSP can fund up to $3500 of that amount. There are other programs that can fund the remainder but more on that in another newsletter.
For that same home, let's say a buyer QUALIFIES for a monthly payment of $1200 including taxes and insurance.
That payment might consist of the following components:
Principle and Interest Maximum $900
Taxes $200
Insurance $100
Total Montly Payment $1200
Using fancy calculators, a $900 principle and interest payment translates to a loan amount of $177,600 for 30 years at 4.5%.
The sales price on that amount using a 3.5% down payment requirement would be about $184,000 (177,600/.965).
Thus, the loan reduction needed for this buyer to purchase the home would be:
List Price $200,000
Affordable Price $184,000
NSP Loan Reduction Benefit $16,000
Estimating closing costs at 2.5% of the sales price or $4,600 means the total estimated NSP benefit needed to purchase the $200,000 home is:
50% FHA Down payment on $184,000 $3,220
Closing Costs at 2.5% $4,600
Loan Reduction $16,000
Proposed NSP Benefit $23,800
How to Structure an NSP Offer
For offers on NSP homes (in the City of Atlanta), agents can use the language in the link below...
