Mortgage Revenue Bond and First Time Homebuyer Program

Mortgage Revenue Bond and First Time Home Buyer Program

This morning I had the opportunity to attend a class on the mortgage revenue bond program for first time home buyers and let me tell you, this can be a great opportunity for many buyers out there! If you are a buyer with strong credit and income but lack the down payment required with traditional lending products, this could be the program for you!

Here are the down and dirty facts...

Eligibility

• Must be a first time home buyer, defined as one
  
  • who has not had a present ownership in principle residence within the past 3 years AND
    
  • who has not taken a real estate tax deduction on Sch A for any residence in past 3 years AND
  • who has not taken a mortgage interest deduction on Sch A for any residence within the past 3 years
• Must be Owner occupied property within 60 days of closing and continue to occupy property
  
• Owner may not use more than 15% of residence in a trade or business, including childcare
• Eligible Loan Products
  • FHA, 203-b
  • VA, guaranteed in accordance with VA guidelines
  • Fannie Mae Conventional
  • Freddie Mac Conventional
  • Minimum credit score 620

Compliance Guidelines

• Sum of current gross monthly income of the buyers and anyone both living in the property and liable on the Deed of Trust
• All forms of income will be used such as - overtime, bonus, SSI, disability income, pension, child support, part-time jobs, self-employment, interest and dividends income, rental income, gambling and lotto winnings

Income/purchase price Limits

• Bexar County
  
  • 1 or 2 buyers - $58,600
  • 3 or more - $67,390
  • Purchase price limits - $299,250
• Austin, Round Rock, San Marcos
  • 1 or 2 buyers - $73,800
  • 3 or more - $84,870
  • Purchase price limits - $259,875

Eligible Properties

• single family units
• agency approved condominiums
• planned unit developments
• manufactured housing meeting FHA guidelines

Down Payment Assistance (2nd lien)

• 5% (subject to change depending on commitment lot), based on the principal amount of the 1st mortgage loan
• 30yr, 0% interest, deferred loan
• upon sale, refinance, transfer, or if buyer ceases to occupy the property as primary residence, repayment of the full amount of the 2nd loan is required
• DPA loans are not assumable
• No payments are required, therefore not required to be included in DTI ratio
• May be used for down payment, normal and customary closing costs, prepaid items and earnest money.

Recapture Tax

• This allows the government to collect the subsidy received by the buyer in down payment assistance and/or below market interest rates financed with this program.  It is due if...
  • the property is sold within 9 years after the mortgage closed AND
    
  • there is a gain (net profit) on the sale of the home AND
  • the borrowers experience substantial increase in their income above the modified adjusted gross income
• The max recapture tax to be paid is the lesser of:
  • 6.25% of the original mortgage amount OR
  • 50% of the gain realized on the sale of the residence

Home buyer Education

• All home buyers must pre-purchase and complete a home buyer education course
• The completion certificate must be included in the closed loan file.

The program is offered with or without the down payment assistance program.  If you choose to use the DAP you will be paying a slightly higher interest rate on the primary mortgage.  For more details or to see if this program might benefit you please contact me or Steve Brown, branch manager of Gold Financial Services (see contact information below). 

The above information was provided by:

Steve Brown,  NMLS 234766

cell: 210-862-2885

sbrown0007@aol.com

www.goldfinancialservices.net

Gold Financial Services

A Division of Highlands Residental Mortgage, LTD