Financing Opportunities For First Time Home Buyers

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Fay Hampton
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1 Financing Opportunities For First Time Home Buyers The Petix Group Park Avenue Realtors February 13, 2010 Michael Catalino/Senior Mortgage Consultant

2 TOPICS TO BE COVERED FHA USDA SONYMA General Qualifications/Income and Purchase Price Limits DPAL TCAL Questions

3 FHA What is the Federal Housing Administration? The Federal Housing Administration, generally known as "FHA", provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. Why does FHA Mortgage Insurance exist? Unlike conventional loans that adhere to strict underwriting guidelines, FHA-insured loans require very little cash investment to close a loan. There is more flexibility in calculating household income and payment ratios. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In most cases, the insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property -whichever is longer.

FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. Why does FHA Mortgage Insurance exist?

4 FHA The History of FHA Congress created the Federal Housing Administration (FHA) in The FHA became a part of the Department of Housing and Urban Development's (HUD) Office of Housing in When the FHA was created, the housing industry was flat on its back: Two million construction workers had lost their jobs. Terms were difficult to meet for homebuyers seeking mortgages. Mortgage loan terms were limited to 50 percent of the property's market value, with a repayment schedule spread over three to five years and ending with a balloon payment. America was primarily a nation of renters. Only 4 in 10 households owned homes. During the 1940s, FHA programs helped finance military housing and homes for returning veterans and their families after the war.

When the FHA was created, the housing industry was flat on its back: Two million construction workers had lost their jobs. Terms were difficult to meet for homebuyers seeking mortgages.

5 USDA What is the USDA? The USDA stands for the United States Department of Agriculture. The USDA offers a Rural Development Mortgage for eligible properties and home buyers. What are the features and benefits of the USDA program?

Features USDA Benefits 100% Financing (no down payment) Borrowers without savings, or who wish to retain their savings qualify Expanded Qualifying Ratios Seller is allowed to pay Buyer s Closing

6 Features USDA Benefits 100% Financing (no down payment) Borrowers without savings, or who wish to retain their savings qualify Expanded Qualifying Ratios Seller is allowed to pay Buyer s Closing Costs Low Minimum Credit Score No Monthly MI Generous Income Limits based on 115% US Median (no t HUD) No Maximum Purchase Price Buyers with satisfactory credit may qualify with higher Debt-to-Income ratios Reduces out of pocket costs for Buyers Buyers with non-traditional or no credit histories may qualify No Monthly mortgage insurance means lower monthly payments Higher income limits allow more people to qualify Buyers choose the home that meets their needs NOT Just for First-Time Home Buyers USDA is the Lowest Payment Loan Option for Buyers Wanting a Fixed Rate All homebuyers are eligible for benefits No MI, very low 30 Year Fixed Rate and very easy to Qualify Web Site:

ratios Reduces out of pocket costs for Buyers Buyers with non-traditional or no credit histories may qualify No Monthly mortgage insurance means lower monthly payments Higher income limits allow more

7 SONYMA Q&A What does SONYMA stand for? State of NY Mortgage Agency Name 4 SONYMA programs? Low Interest Rate Mortgage Achieving the Dream Mortgage Construction Incentive Remodel New York

8 SONYMA GENERAL QUALIFICATIONS/INCOME AND PURCHASE PRICE LIMITS First Time Homebuyer (not owned a home within the past 3 years). Income Limit : Achieving the Dream $46,550 (1+ Household) Income Limit: Low Rate Program $67,900 (1-2)/$78,085 (3+) Purchase Price Limit: $258,690 Minimum Investment: 1% of the NET Purchase Price Assets: sourced and seasoned for minimum of 30 days

Income Limit : Achieving the Dream $46,550 (1+ Household) Income Limit: Low Rate Program

9 DPAL: DOWN PAYMENT ASSISTANCE LOAN Program launched in January Replaces existing Closing Cost Assistance Loan (CCAL) Used in conjunction with any SONYMA program Loan will be second lien versus a co-first lien with CCAL program Primary source of funds is to cover down payment and residual cash can be used to cover closing costs

SONYMA program Loan will be second lien versus a co-first lien with CCAL program

10 DPAL: DOWN PAYMENT ASSISTANCE LOAN This is a 2 nd Mortgage with a loan term of 10 years. The interest rate is 0% and there is no monthly payment. Repayment: None, as long as the SONYMA 1 st mortgage is not paid in full during the first 10 years. After 10 years the loan is forgiven. If the SONYMA 1 st mortgage is paid off prior to the 10 th year, a portion of the DPAL may require repayment. Borrowers opting for a DPAL will pay an interest rate that is 0.50% higher on the SONYMA 1 st mortgage. Maximum Loan Amount Maximum assistance is the greater of $3,000 or three percent (3%) of the home purchase price (not the loan amount) but may not exceed $10,000 Only fees required on DPAL are Mortgage Tax and recording fees Program cannot be used in conjunction with Tax Credit Advance Loan (TCAL)

If the SONYMA 1 st mortgage is paid off prior to the 10 th year, a portion of the DPAL may require repayment. Borrowers opting for a DPAL will pay an interest rate that is 0.

11 DPAL: DOWN PAYMENT ASSISTANCE LOAN Borrowers minimum contribution is based upon the net purchase price (purchase price less the amount of DPAL and other grants/subsidy funds applied to down payment). Example: Sales Price: $100,000 DPAL 2 nd Mortgage $ 3,000 Net Purchase Price $ 97,000 Minimum contribution is $970.00

grants/subsidy funds applied to down payment).

12 SONYMA TAX CREDIT ADVANCE LOAN (TCAL) Second mortgage program that allows SONYMA borrowers to apply their anticipated Federal homebuyer tax credit toward the purchase of a home. Equal to 10% of the purchase price, not to exceed $8,000 ($6,500 for non-first time homebuyers eligible veterans or those purchasing in a target area). SONYMA will advance funds to eligible homebuyers who plan to file for homebuyer credit on their Federal tax returns. Funds may be used for down payment and closing costs. TCAL may not exceed the total amount needed for down payment, closing costs, and pre-paid expenses (after applying the borrowers minimum contribution.

Equal to 10% of the purchase price, not to exceed $8,000 ($6,500 for non-first time homebuyers eligible veterans or those purchasing in a target area).

13 SONYMA TAX CREDIT ADVANCE LOAN (TCAL) 10 year term Repayment is deferred until June 30 th 2011 without interest. If the borrower opts not to use tax credit to repay SONYMA, interest accrues at 1% over the note rate of the 1 st mortgage beginning August 1, TCAL payment is included within SONYMA s maximum housing /debt to income ratio, not to exceed 40/45. There is no 1 st mortgage rate add on for the TCAL program.

If the borrower opts not to use tax credit to repay SONYMA, interest accrues at 1% over the note rate of

Delaware State Housing Authority. DSHA Homeownership Loan Programs

Delaware State Housing Authority DSHA Homeownership Loan Programs DSHA is committed to following all aspects of the Fair Housing Act in our efforts to promote responsible homeownership and obtaining competitive