Those looking at one option for a zero down payment on a home in Battle Ground will have to look elsewhere as changes to the United States Department of Agriculture’s (USDA) eligibility maps have the growing city removed from its rural designation effective June 4.
Back in March the USDA announced its proposed changes to the eligibility map for its Single Family Housing Guaranteed Loan Program. The change in the map is nationwide, however effects in Clark County will have the cities of Camas and Washougal being declared ineligible alongside Battle Ground, the only city or town in North Clark County receiving a map change.
Luke Loiselle, an agent with Keller Williams Realty, explained that the USDA’s eligibility maps were based on population per square mile. He said these changes to the maps happen periodically every few years.
“Battle Ground was a great area for that (loan),” Loiselle said, noting its proximity to Vancouver and Portland while still retaining the rural designation and eligibility.
The only other ways would-be home buyers in Battle Ground could get a zero-down payment loan would be Washington State loans through the Federal Housing Authority or through the Veterans Administration, Loiselle explained, with both requiring significantly more of applicants than the USDA does.
“The USDA (loan) really opens it up to everybody underneath a certain income,” Loiselle remarked.
For potential homebuyers with households up to four people and an income below $85,900, or five or more people with an income below $113,400, places like La Center, Ridgefield and much of unincorporated Clark County will still be eligible. But come June, Battle Ground homebuyers will be out of luck.
Regarding impacts, data from the National Association of Realtors (NAR) 2017 Profile of Home Buyers and Seller’s showed average down payments were divided between new and veteran homebuyers, with first-time buyers having a national average of 5 percent down and repeat home buyers at 14 percent. A summary from the NAR about the report noted that the discrepancy was likely due to repeat buyers using sale proceeds of their old home to help put money down.
Based on an average home price of $380,000 which Loiselle said was consistent with Battle Ground, those numbers would translate to $19,000 on a 5 percent down payment and up to $53,200 at 14 percent.
Though a down payment could be nixed through use of the USDA’s eligibility, the total cost (along with closing costs) would still need to be paid. Loiselle said the zero down payment was advantageous to would-be homebuyers unable to save up the money for a large down payment but with adequate resources to pay a higher monthly payment.
“They make enough money, they just haven’t been able to chunk away the change. They want to make that move into home ownership,” Loiselle said. “That payment being probably $50 to $100 more is much more doable than saving up $13,000, $20,000.”
There is still a slight chance that those already somewhere in the process of house hunting in Battle Ground can take advantage of a down-payment-free loan, as the USDA’s release included criteria that if met could have that loan guarantee provided to them.
If the applicant has a signed/ratified sales contract on a property that is dated prior to June 4, 2018, those loans would still be available given that the application is dated and received by the lender prior to June 4, 2018 and the loan estimate was issued by the lender within three days of application receipt.
That doesn’t leave a whole lot of time, as Loiselle said in most cases would-be homebuyers are out of luck if looking in Battle Ground. He said it is important to talk with a preferred lender before making any decisions.
Though Loiselle said given Battle Ground’s population growth it was probably time for a map update, he had not heard much of anything about the change until this past winter. Since then he has been telling clients of the coming change, noting that areas just outside city limits for the most part were still eligible.
“It’s important to know exactly what that guideline is and where that stops because there are still some great homes just across the street from the ones that can’t qualify,” Loiselle said.
Loiselle reiterated that loans covered by the FHA or the VA with zero-down payments were an option for those who qualify. If none of those are available, he also mentioned crowdfunding as an option. He mentioned that other than gifts or informal loans from family, there were also opportunities in services like HomeFundMe.com, which sets up a crowdfunding page on the internet for friends and family to help chip in one’s down payment.
Though there are options available to pay or drop the down payment, ultimately the switch would change up the housing market in Battle Ground to some degree. The bottom line? “It’s going to restrict the amount of people who can purchase homes in Battle Ground,” Loiselle said.
