There are several ways that same sex couples can finance a home purchase including traditional mortgage lenders and possible other options. Following are the top 3 ways for same sex couples to finance a home.
1. The U.S. Finance and Administration, FHA, is a division of the U.S. Department of Housing and Urban Development, HUD. Because discrimination based on marital status is prohibited, it makes no difference if you are married or not when applying for a loan. Federal law also prohibits FHA from considering sexual orientation or gender identity of loan applicants.
FHA insures loans so that qualified lenders can offer you easy qualifying and low closing costs on your new home. FHA requires a down payment of 3.5 percent of the purchase price, well below the percentage that must be paid with most traditional mortgages.
FHA does not actually make loans; it is an insurance fund that guarantees loans so lenders can offer good terms to home buyers. Since each FHA approved lender sets its own interest rates and costs, it would be wise to check with several lenders to find the best rates possible.
For more information on FHA loans, you should contact your gay realtor for a referral to a gay friendly FHA qualifying lender.
2. The Veteran’s Administration, VA, offers guaranteed loans to veterans. The VA does not make loans. Like the FHA, the VA insures loans made by approved lenders. If you or your partner is a veteran, you could qualify for a lower interest rate loan.
Unmarried same sex partners may apply for a joint loan, but the VA will only guarantee approximately 40 percent of the total loan if only one of you is a veteran. If you are married, it is likely that you will quality for a VA loan unless you live in a state that does not recognize same sex marriages. The Veteran’s Administration is evaluating those applications on a case-by-case basis.
Generally, obtaining a VA loan allows lenders to mortgage your new home with no down payment and negotiable interest rates. Closing costs are comparable or lower than traditional mortgages and you may be able to finance VA’s funding fee in the mortgage.
For more information on VA loans, you should contact your gay realtor for a referral to a VA qualifying lender.
3. Seller financing is available on some homes. When a seller finances the home, there is no need to apply for a mortgage from a traditional or other type lender. You will sign a promissory note and make your payments, including interest, directly to the seller. If you live in a state, such as California, that has enacted anti-discrimination laws because of sexual orientation or sexual identity, the seller would be forced to sell to you if you meet his qualifications including down payment and credit worthiness.
The benefits of seller financing include no lender origination or other fees and there is no need to worry about strict mortgage lender requirements. Since the terms are negotiated between you and the seller, you may end up with a lower down payment and interest rate than you would with a traditional mortgage.
If you are interested in purchasing a seller financed home, you should check the laws in your state to ensure that you cannot be discriminated against.
In addition to the above, many states offer mortgage assistance programs. For example, MaineHousing’s First Home Program offers low fixed rate mortgages. You should check with your state government to find out what options are available in your area.
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