Everything You Need to Know About the FHA 100% CLTV Combo Program for First-Time Homebuyers

Buying a home, especially your first one, can be overwhelming—especially when trying to save for a down payment. Thankfully, programs are designed to help first-time homebuyers with down payment assistance and more! One program that stands out is the FHA 100% CLTV Combo Program. This program helps you get a mortgage and provides additional help for the down payment, making homeownership possible even if you don’t have a lot saved up.

What is the FHA 100% CLTV Combo Program?

The FHA 100% CLTV (Combined Loan-to-Value) Combo Program offers qualifying buyers 100% financing by combining an FHA first mortgage loan with a second loan that covers the down payment. In other words, you don’t need to pay for the down payment out of pocket because the program finances it for you! This program is designed to increase homeownership, especially for those with moderate to lower incomes.

Who is Eligible?

This program is beneficial for first-time homebuyers or anyone who may need a bit of assistance with their down payment. However, you don’t have to be a first-time homebuyer to qualify—so if you’ve owned a home in the past, you can still benefit from this assistance.

Here are the main eligibility requirements for this FHA-backed program:

• Credit Score Requirements: To qualify, you’ll need a credit score of at least 600 if you’re approved through the Automated Underwriting System (AUS). A credit score of 660 is required if your loan is manually underwritten.
• Income Limits: Unlike many down payment assistance programs, this one has no household income cap. That means more people may qualify regardless of income level.
• Homebuyer Education: One borrower must complete a homebuyer education course through a HUD, Fannie Mae, or Freddie Mac-approved agency. This helps buyers understand the home-buying process and their responsibilities as new homeowners.

How Much Down Payment Assistance is Available?

With this program, you get:

• 3.5% Down Payment Assistance: This amount, provided as a second loan, covers the entire down payment requirement for FHA loans. This second loan is a fully amortized 10-year loan with an interest rate 2% higher than the FHA first mortgage.

The beauty of this program is that it allows for 100% financing—meaning you can get into your new home without needing to come up with cash for the down payment.

What Type of Property Can I Buy?

To be eligible, the property you purchase must be a primary residence. Here’s a breakdown of the property types that qualify:

• Single-family homes (attached or detached)
• FHA-approved condos
• Certain double-wide manufactured homes
• Attached/detached Planned Unit Developments (PUDs)

However, keep in mind that this program does not cover properties like:

• 3-4 unit properties
• Commercial properties
• Mobile homes
• Non-warrantable condos
• Homes in New York (program restriction)

Key Benefits of the FHA 100% CLTV Combo Program

1. No Out-of-Pocket Down Payment: With 100% financing, you don’t need to stress saving for a hefty down payment.
2. No Income Cap: Unlike many down payment assistance programs, this one does not have an income restriction, making it accessible to more buyers.
3. First-Time Homebuyer Advantage (But Not Required): While this program is great for first-time buyers, it’s also open to anyone who meets the requirements.

Things to Keep in Mind

• Debt-to-Income Ratio: Your debt-to-income (DTI) ratio should align with the FHA’s automated underwriting system (AUS) limits. If your loan is manually underwritten, the DTI cap is 45%.
• Primary Residence Only: You must occupy the home as your primary residence within 60 days of closing and stay for at least one year.
• Credit Matters: This program requires a minimum credit score of 600 (AUS) or 660 for manual underwriting. This score is the combined average of all borrowers on the loan.

How to Apply for the FHA 100% CLTV Combo Program

If you’re interested in the FHA 100% CLTV Combo Program, contact a lender who offers FHA loans and is familiar with down payment assistance programs. They’ll help guide you through the qualification process, check your credit, and explain the necessary steps to cover the down payment.

Final Thoughts

For anyone dreaming of homeownership but struggling with saving for a down payment, the FHA 100% CLTV Combo Program offers a fantastic solution. With minimal upfront costs, no income cap, and eligibility for both first-time and repeat buyers, this program is worth exploring. Talk to your lender today and take the first step towards making your homeownership dreams a reality!

Keywords: FHA, first-time homebuyer, down payment assistance, FHA 100% CLTV Combo, primary residence