Need cash for closing? Look here

June 14, 2022
Posted in Programs
June 14, 2022 derekevansteam

After all is said and done with the purchase of a new home, the last thing you want to do is cough up even more cash for closing costs. It’s one of those things that often goes forgotten until it rears its ugly head last minute to remind you that, yes, you do owe more than you originally thought. The good news is, there are programs out there created specifically for helping homebuyers cover closing costs. One such program is the Freddie Mac BorrowSmart.

What is the BorrowSmart program?

The Freddie Mac BorrowSmart program can offer buyers up to $2,500 in down payment or closing cost assistance based on area median income (AMI) and other eligibility criteria. You can use the funds to cover 100% of the close!

This program is an accompaniment to the Freddie Mac Home Possible and the Freddie Mac HomeOne loan offerings. These types of mortgages require as little as 3% down and can be used with fixed or adjustable rate loans.

A custom plan fit for your needs

The BorrowSmart program has three tiers based on the borrower’s qualifying income in relation to the county AMI of the purchase area. Each tier shows what amount of funds you qualify for to help cover your closing costs. Fannie Mae offers a handy tool for checking your AMI here.

Very Low-Income Purchase

  • At or below 50% AMI
  • Home Possible program only
  • Down payment assistance: $2,500

Low-Income Purchase

  • Above 50% AMI and at or below 80% AMI
  • Home Possible program only
  • Down payment assistance: $1,250

Moderate-Income Purchase

  • Above 80% AMI and at or below 100% AMI
  • Purchase property must be in high needs tract
  • HomeOne program only
  • Down payment assistance: $1,000

Benefits of the BorrowSmart program

The BorrowSmart program has a number of benefits. These are:

  • The funds may be used to cover up to 100% of your closing cost. This means you could buy a home without having to put any money down at all.
  • The funds can be combined with other down payment assistance programs and gifts. 
  • Having this tool in your arsenal will give you a competitive edge in the market as a buyer.
  • Even if you don’t get 100% of closing costs covered, having extra cash in your pocket after closing is always a win. This can be invested, saved, used for furniture, put towards renovations, etc..
  • The mandatory homebuyer education program will set buyers up for success and provide invaluable information to kickstart the home ownership process!

How to qualify for Freddie Mac BorrowSmart assistance

For AMI requirements, see above section ‘A custom plan fit for your needs’, but as a reminder, you need to be at or below 100% of the AMI of the purchase area to qualify. 

The BorrowSmart assistance can be used for:

  • Single family residences
  • Condos
  • Planned unit developments
  • Manufactured homes

No matter what state you live in, you’re eligible for this program. Freddie Mac’s BorrowSmart is available in all 50 states!

One caveat is that you must use the Freddie Mac HomeOne or Home Possible mortgage to qualify for the BorrowSmart assistance. Need help determining your eligibility? Contact us today!