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Home Ownership ProgramsPresented by
Irene Hardisty
Single Family Production Director
• FirstHome Program– first mortgage– grant (Plus)
• Military Home Ownership Assistance– grant
• Title Guaranty Certificate – Home Owner’s Certificate
• On-site Wastewater Assistance Program (OSWAP) – “septic system funding”
• Iowa Mortgage Help hotline
IFA Home Ownership Programs
Be a partner with IFA
in providing affordable homeownership opportunities!
• Lenders must be prior approved and maintain set criteria to participate in the program (www.IowaFinanceAuthority.gov)
– SRP: IFA pays participating lenders > 1.75% or $1,000 for mortgage purchased
Lender income is restricted to the SRP and up to $250 closing/settlement fee if the lender is the closing agent.
– P. Lenders have delegated authority for underwriting and pre-closing MRB compliance review.
• Lender options for participation:• Participating Lender* • Participating Correspondent Lender *• Third-party Participating Lender *• Third-party sourcing lender
Lender participation in IFA Homeownership Programs
FirstHome Program• Not Only for first-time homebuyers (FTHB):
– 86 targeted counties - FTBH not required– Veteran exemption from FTBH requirement– 13 counties must be FTBB:
• no real estate ownership interest in primary residence for last 3 years.
• Purchase price limits:– Targeted areas: $289,000 (86 counties) – Non-Targeted: $237,000 (13 counties)
• Must establish FTHB – no real estate ownership interest in primary residence for last 3 years.
• Household income limit: 115% AMI – by family size 1-2 person & 3+ and per county (see brochure)
• Property:– 1 unit purchase for primary residence– Generally limited to 5 acres and > 15% sq.ft. for business use– Personal property purchase may not be financed
with mortgage• Eligible for $8,000 Federal Tax Credit
FirstHome Program Mortgages
• FHA:– 203b, 203c, 203ks (purchase + streamline rehab up to $35,000)
• RD 502 Guaranteed• VA Guaranteed• Conventional:
– MyCommunity Mortgage, HomePossible or standard conventional– Secondary market fee for Fannie Mae loan level price adjustment
and adverse market fee• Fixed, fully amortizing, 30 year term• Restricted to reasonable and customary third party fees but not fee for
lender outsourced services (e.g. note & mortgage doc prep. fee)• If settlement agent, lender may collect $250.00 closing fee• NO origination fee or discount points• Title Guaranty is the required title insurance
FirstHome Recapture
May be subject to a “recapture tax” IF– Sold home within first 9 years;– Incomes >5%/year above the
MRB household limit in effect when the FirstHome mortgage closed; AND
– Have gain on the sale of the house.
• Yes No • Yes No
• Yes No
•FirstHome - federally subsidized by tax exempt bond financing
Need 3 “Yes’s” for Recapture to apply!!!!!!!
FirstHome Recapture
• “maximum recapture” is lesser of – (A) adjusted 6.25% schedule – or (B) 50% gain on Sale
• Mortgage X 0.0625 X year adjustment X income % (adj. personal income/ adj. income cap) = _(A)_
• Sale price – original purchase price – improvements + sale costs= gain on sale X 0.50 = _(B)_
6.25 adjustment schedule:
• 1st year: 20% • 2nd year: 40%• 3rd year: 60%• 4th year:80%• 5th year: 100%• 6th year: 80%• 7th year: 60%• 8th year: 40%• 9th year: 20%• 10th year: - -0-
•Work with their tax preparer (IRS form 8828)
FirstHome Recapture - Example
Sale in 4th year at $96,000• FirstHome mortgage $90,000 (& had purchased at $90,000)• (A) 90,000 X .0625 X .80 = $4,500• (B) 96,000 – 90,000 – 6,310 = no gains• “B” = no recapture • IF “gains” – remember lesser of 50% gains (B) or income
calculation (A)• If income below 1.05% appreciation table – no recapture
FirstHome Plus
$2,500 grant with FirstHome mortgage for household income at $49,600 (80% AMI) or less
• Mortgage interest rate is slightly higher
• No matching funds needed
• For down payment, closing costs or prior approved minor repairs.
Military Home Ownership Assistance
$5,000 grant – for prior approved down payment or closing costs
• Military persons who have served 90 active duty days 9/11/01, surviving spouse or discharged due to medical injury.
• MUST be purchasing primary residency in Iowa.
• Home buyers eligible for FirstHome or FirstHome Plus must use FirstHome/FirstHome Plus.
• IFA participating lender must handle the request to
IFA and close the loan.
Title Guaranty Certificate
Title Guaranty is title insurance issued in Iowa• Lender’s coverage protects the Lender • Owner’s coverage protect the homebuyer• Low cost - $110 includes lender and owner
certificate (“insurance”)• Free Owner’s Title Guaranty fee with issuance of
Lender’s Title Guaranty. • Rapid TG Certificate – final policy within 3 weeks
Title Guaranty vs. Title Insurance
Title Guaranty: • Benefits Iowa economics• Excess revenue goes to
support to affordable home ownership for Iowans (Plus grant)
• Final title policy in weeks – saves the lender time & overhead costs of “chasing down” final abstracting, attorney opinion and final policy!
• Affordable: – Lender $110 basic – Homeowner - free
Title Insurance• Benefit economies in other
states• No donation of funds to Iowa
homebuyers
• Final policy after satisfaction of seller’s mortgage, abstractor updates title and attorney provides final opinion.
• Affordable to lender• No option for homebuyer except
large fee
Septic System – low cost funds
On-site Wastewater Assistance Program (OSWAP)
• Loan for the replacement of inadequate or failing septic systems (existing property)
• Property located in unincorporated area• Existing homeowner or coordinated in conjunction with
purchase of home• Minimum loan amount of $2,000, maximum 3% interest rate,
up to 10 years repayment • Loan is accessed through OSWAP participating lender www.IowaFinanceAuthority.gov; Water Quality Programs
[email protected] or 800-432-7230
Iowa Mortgage Help
Homeowners call:
877-622-4866
or
Complete an on-line application at
www.IowaMortgageHelp.com
A counselor will contact the client within two business days, but usually sooner.
Contact Information
Stephanie PreuschIowa Home Ownership Education [email protected]
Julie NolandIowa Finance [email protected]
