If you live in the Southeast area of Texas and can’t afford a down payment or closing costs, the SETH 5 Star Texas Advantage Program may be of assistance. This program can help you afford the loan, enabling you to become a homeowner.
The Requirements of the SETH 5 Star Texas Advantage Program
Qualifying for the SETH 5 Star program is simple:
- You need at least a 640 credit score – A 640 credit score is considered a ‘fair’ credit score, which means you don’t need perfect credit to qualify
- You don’t have to be a first-time homebuyer – This means that you can even own other properties and use the SETH 5 Star program
- You can purchase a single-family home, condo, townhome, PUD or duplex with the program – If you want to buy a manufactured home, you’ll need a minimum credit score of 680
- The home must be located within Texas with a few exceptions – the home cannot be within the limits of El Paso, Grand Prairie, or Travis County
- Your maximum total debt ratio cannot exceed 45% – This means your debts that include the new mortgage payment plus any existing debts cannot take up more than 45% of your gross monthly income
- The home must be your primary residence – You must live in the home full-time in order to use the SETH program.
The Maximum Loan Limit
You can secure a government-backed or conventional loan with the SETH 5 Star Program. If you secure a government-backed loan, such as an FHA, VA, or USDA loan, you can borrow between $294,515 – $362,250. If you qualify for a conventional loan, you can borrow up to the full conventional loan maximum of $484,350.
What is the SETH Program?
So how does the SETH program work?
It’s a second mortgage program that provides you with up to 4% – 5% of the loan amount to cover the down payment and closing costs. The second mortgage program doesn’t work like your typical second mortgage, though. You aren’t required to make payments on this loan.
If you secure a government-backed loan, a prorated amount of the loan is forgiven every month that you own the loan until the full amount is forgiven in 3 years. If you secure conventional financing, the SETH funds are a grant that doesn’t require repayment.
The SETH program helps borrowers purchase a home without requiring money out of their own pocket if your total income is less than the median income for your area. You don’t need a minimum investment and there is no required amount of funds recapture.