financingTwo of the most common questions Porcupine Real Estate receives from new and potential movers looking to buy a home are, "How much home can I afford?" and "Do you know a good lender?"

Choosing a Local Lender

We always recommend talking with a local lender to determine monthly payments and budget before starting the home search. Porcupine Real Estate's broker & owner, Mark Warden, explains the importance of using a local lender,

"Many times, local lenders will be more available by phone or in person than lenders from larger national chains. We recommend using a lender who provides his or her cell phone so that you may reach him or her easily, and who is available to meet with you in person (in NH) to discuss the best loan type for your situation."

Employment Requirements for Financing

So, once you find a local lender, what's next? Well, you'll need to have a couple months' bank and investment statements available to provide to the lender, and you'll have to be employed. Lender Chris Nadeau with Primary Residential Mortgage says that the biggest obstacle to overcome when moving to New Hampshire and applying for a mortgage is job stability.

"The lender will need to know if the home buyer is moving with the same company or getting a new job. If starting a new job, then it has to be in the same field and we'll need an offer letter and a pay stub prior to closing."

Being self-employed shouldn't be a hurdle to mortgage pre-approval, either, as long as it is a job where you can work remotely and have two years of tax returns. If, however, the applicant is self-employed with a service job like a carpenter, then he'll need to be established in New Hampshire for two years before getting a mortgage.

Choosing a Loan

Once you've gone through the pre-approval process, the lender will discuss the various loan types with you:

  • Conventional – Conventional financing loans start at 3% down and many times is the ideal way to go because the private mortgage insurance (PMI) is cheaper than with FHA. Additionally, PMI will disappear when you pay your loan balance down to a 80% loan-to-value ratio. The loan limit for conventional mortgages is around $453,000.
  • FHA - This is a good option for a buyer who has a mediocre credit score because the interest rates with FHA loans are not dependent on credit score. Minimum down payment for FHA loans is 3.5% and there are maximum loan amount limits by county (Nadeau to confirm) as follows: Belknap - $294,515, Carroll - $294,515, Cheshire - $294,515, Coos - $294,515, Hillsborough - $312,800, Merrimack - $294,515, Rockingham - $603,750, Strafford - $603,750, Sullivan - $294,515.
  • VA - A great option for military veterans, the VA loan is one of the best loans available if you have very little cash for a down payment. There is no monthly PMI with VA financing and buyers can put 0% down.
  • USDA/Rural Development - Excellent for 100% financing, USDA loans are limited by income, not by purchase price. The income limits are set on a county-by-county basis and the home has to be located in a non-metro area. Contrary to popular belief, this type of financing is not for plots of land and is based solely on population density of a given town. Your lender will be able to provide income limits for each county in New Hampshire.

Nadeau recommends talking with a lender about various strategies for purchasing a home in New Hampshire. For example, if you are selling your house to move to New Hampshire but it hasn't sold yet, you could do a low down payment on the New Hampshire home purchase. Once the old home is sold, you can make a large lump sum payment and reamortize the loan. This can eliminate PMI and reduce the payment based on a new loan balance.

Cryptocurrency and Gifts as Payment

Other questions Nadeau gets asked frequently include using Bitcoin and other cryptocurrency for a downpayment and using gift funds for a home purchase. "I suggest buyers choose a lender who has knowledge of cryptocurrency so the lender can review options and scenarios. Gift funds from family members, however, are allowed for down payments and closing costs on all loans."

Affordable Multi-Family Homes

If you don't think you can afford a home in New Hampshire, don't lose hope. "Multi-family homes are great for first-time home buyers because they can get more bang for their buck," says Warden. If you don't already own another home, you can buy a multi-family property for as little as 3.5% down for up to 4 units as long as you plan to live in the building. And the lender can use 75% of the rental income to add to the buyer's income for debt-to-income ratio purposes, resulting in more buying power overall.

Discussing Financing Early in the Process

"It's important that home buyers talk with a lender as soon as possible to discuss their credit report and scores and to get the ball rolling and develop strategies for their New Hampshire home purchase," adds Warden. If you're thinking of moving to the Granite State and have questions about local lenders or the home buying process, contact Porcupine Real Estate today.