How a first-time homebuyer paid less than $50 to close on her South Philly rowhouse

Teresa Nutter had never seriously thought about whether she wanted to buy a home.

“I didn’t think I could, so I never even entertained the idea,” said Nutter, 39.

She didn’t have much money in savings. Her 20s included student loan delinquency and years of homelessness. That period damaged her credit.

But her rent was increasing every year and became unaffordable. And Nutter, a business administrator at the University of Pennsylvania, had been improving her credit score. Her friend and real estate agent showed her a century-old rowhouse half a block from her rental that she fell in love with for its location, original details, and homey feel.

She paid an initial $1,000 deposit for the $266,000 rowhouse in South Philadelphia. On Aug. 15, she walked out of her settlement with a check refunding her $951.19.

So all together, she closed on her two-bedroom, one-bathroom house for $48.81.

“I was floored,” Nutter said.

Large lump-sum payments needed to close a sale can prevent people from buying a home even if they can afford monthly payments. But first-time buyers can get help from places such as government agencies, mortgage lenders, and nonprofits.

A city grant, seller assistance, and the mortgage type made it possible for Nutter to become a homeowner.

Peter Buchsbaum, manager of the mortgage brokerage Good Cents Financial, based in Bucks County, has spent 51 years in the industry and thinks Nutter’s out-of-pocket cost might be the lowest he’s seen.

He worked with David Omojogunra, Nutter’s real estate agent, to figure out how to keep Nutter’s costs “to the lowest amount humanly possible.”

“She ended up buying a house with a [mortgage] payment that was less than her rent, and she needed less than 50 bucks to achieve the goal,” Buchsbaum said.

Omojogunra, an agent with Center City-based Space & Company, called the figure “pretty insane.” Until Nutter’s closing, the lowest out-of-pocket cost for a Space & Company client was about $1,800.

“There’s a lot of people who don’t think [buying a home] is possible because they either don’t have the savings or don’t have the credit,” Omojogunra said, “but there’s so many opportunities and programs out there, whether it be through lenders, through grant programs, and individuals who are there to truly help you.”

Help from the city

Philly First Home, the city’s assistance program for first-time homebuyers, offers grants of up to $10,000 or 6% of the purchase price, whichever is less. It ran out of money in 2020 and shut down, but the city brought it back in 2022.

Nutter had no idea about the program until she talked to her agent and did some research. “I didn’t think it was real,” she said.

But the program was real, and she qualified, since she was buying a single-family home or duplex in Philadelphia, made less than the program’s income cap, and agreed to complete the required free housing counseling.

Philly First Home gave Nutter $10,000, “which was a huge, huge portion of why she was able to make this happen,” Omojogunra said.

Help from the seller

Unlike many other regions across the country, sellers still generally have the upper hand over buyers in the Philadelphia area, thanks to the region’s relative affordability and a low supply of homes that hasn’t kept up with demand.

But that doesn’t mean buyers can’t ask for anything from sellers. Getting concessions has gotten easier over the last couple of years as the market has slowed from the frenzy of the pandemic era.

In Nutter’s case, Omojogunra negotiated with the seller, whose house had just hit the market. The agent knew that the property would appraise for more than the $245,000 asking price. So he got the seller to raise the price to $266,000 in exchange for contributing to Nutter’s closing costs. That way, the seller would still get the net profit she wanted.

The seller agreed to contribute about $15,000.

“A lot of times, people think that it’s not a possibility,” Omojogunra said. “But it really just comes down to having a good strategy and being overly communicative.”

An FHA loan

Nutter also benefited from the type of mortgage she got — a loan through the Federal Housing Administration.

The FHA loan only required her to put down 3.5% of the purchase price and allowed the seller to contribute up to 6%. And FHA mortgage interest rates are currently lower than rates for conventional loans, said Buchsbaum, Nutter’s mortgage broker.

“The FHA gave me a lower monthly payment and allowed me a greater seller assist,” he said. “The two things combined just worked to her advantage.”

Homebuyer grants and assistance from sellers also help offset settlement costs for buyers with conventional mortgages. But if a buyer puts down less than 10%, a seller’s assist can’t be more than 3%, Buchsbaum said.

“So you probably don’t get as close to only spending under 50 bucks,” he said, “but you can still buy a house pretty inexpensively.”

Takeaways

Buchsbaum said that before walking into any house for sale, every buyer should figure out how much they are comfortable spending for monthly payments and for down payment and closing costs.

“And if you can give someone like me those two figures, then we can sit and navigate ‘How do we get there? How do we achieve that?’” he said.

Nutter said she wanted to make sure she didn’t deplete her savings, so she still had a rainy day fund for the challenges homeownership and life could throw her way.

She plans to move into her roughly 900-square-foot home later this month. And she has a message especially for fellow millennials who feel discouraged about their ability to buy a house.

“It is possible. I think that’s really important for people to understand,” Nutter said. “You can get a house if you want to.”