The Homeownership Opportunities Program (HOP) provides down payment or closing cost assistance for home purchases (existing or new construction) to low- or moderate-income first-time homebuyers, defined as 80% of the HUD AMI. HOP matches other funds to increase a homebuyer's total source of funds to purchase a home.
In order to maximize funding throughout the year, there are two categories of HOP namely HOPExpress and HOPReserve. Under the HOPExpress component, funds are available on a first-come, first-served basis. While under the HOPReserve component, member financial institutions of the FHLBI must submit an application for a specified amount of funding. If awarded, funds are reserved for a designated period and can be requested as needed until the deadline. Members must have completed training and submitted an agreement and registration form before funds can be disbursed.
Recipients of HOP funds must meet all of the following requirements:
•· HOP funds may only be made available to a first-time homebuyer. In order to be considered a first-time homebuyer, a homebuyer must be in one or more of the following categories.
•1. An individual and his or her spouse who has had no ownership in a principal residence during a three-year period ending on the date of the purchase of the property.
•2. An individual who is a displaced homemaker and has only owned a home with a spouse.
•3. A single parent who has only owned a home with a former spouse while married.
•4. An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
•5. An individual who has only owned a property that was not in compliance with state, local or model building codes, or other applicable codes, and cannot be brought into compliance with such codes for less than the cost of constructing a permanent structure.
•· Complete a counseling/education program prior to receiving HOP funds (see Housing Counseling Program section of this document).
•· Cannot receive, for the same property, more than one FHLBI grant of any kind, or more than one grant from any Federal Home Loan Bank.
•· Have household income that is equal to or less than 80% of the area median income (AMI) adjusted for family size as published annually by HUD (see our web site for current charts).
•· Contribute a minimum of $500 of their own cash funds toward the purchase of the home.
•· Be owner-occupants of the home to be purchased (must be primary residence). Duplexes are eligible as long as the homeowner will occupy one-half as the primary residence and 75 percent of the projected income generated from the other half is included in the HOP income qualification process.
•· Lease/purchase arrangements and land contracts are not allowed.
•· All individuals in title to the property for which subsidy is being provided must sign retention documents as described above.
•· Provide all documentation to the member bank as required for participation in the program.
•· Homebuyers may not receive more than $250 cash back at closing. Any HOP funds in excess of the approved mortgage amount, closing costs and cash back to the homebuyer shall be used as a credit to reduce the principal of the mortgage or as a credit toward the household's monthly payments on the mortgage loan. Homeowners' debt to income ratios should meet the following requirements:
•1. Owner's monthly housing expense, including principal, interest, taxes, insurance, and homeowner's dues should not exceed 35% of gross income at application
•2. Owner's total monthly expenses, including housing costs (principal, interest, taxes, insurance, and homeowner's dues) plus all other installment debt should not exceed 45% of gross income at application.