Until now, the $8000 tax credit available to first time home-buyers who qualify and close by 12/01/09, has not been available to be used towards a down-payment.  Effective immediately, in cooperation with the Texas Department of Housing and Community Affairs (TDHCA), we will be able to offer financing using a second loan from TDHCA that is repayable after closing when the buyer receives his $8000 tax credit check.

HOW THE PROGRAM WORKS:

• Borrower doesn’t have sufficient down payment and/or closing costs and requests assistance with these dollar items.
• A second lien is obtained through TDHCA.  This is a 90 day Down Payment Assistance Loan with deferred interest and payment for 90 days from closing. 5% of the first lien mortgage amount can be borrowed, up to a $7000 maximum loan amount for the second loan (not the full $8000). 

For instance, a $100,000 sales price with 3.5% down is $96,500, plus the FHA funding fee of 1.5% is $97,947.50 loan amount.  Five percent of that is $4897.38—the maximum allowed to be borrowed.

• Borrower will be required to provide a cashiers check for $250 made out to TDHCA
• Borrowers must provide 3 years tax returns (required to prove that they are first time home buyers)
• Borrower will be required to complete a pre-purchase homebuyer education course

• Borrowers are expected to amend their 2008 tax returns in order to pay off the 2^nd lien within 90 days but are not required to do so.   However, at the end of 90 days following closing, the loan payment on the second comes due.
• This is a 30 Year Fixed FHA loan only and borrower must qualify with FHA guidelines
• This loan can be used for downpayment, closing costs and prepaids
• This loan is a 27 month loan at 10%, with the first 3 months deferred…full repayment is due at the end of 27 months from closing, if not repaid immediately with $8000 tax credit.
• Texasonly

WHAT YOU NEED TO KNOW:

• Normal $8000 tax credit guidelines apply
• Because they are borrowing the funds, the monthly payment will have to be added to their debts and calculated into their debt to income ratio.  A $7000 loan at 10%, for instance, would equate to $323.01/month, and can impact their borrowing power.
• When you are negotiating the contract, seller contributions are allowed up to 6% of the sales price.  The combination of seller contribution and loan from TDHCA should allow the buyer to come to closing with little or no funds.
• Contracts cannot be for closing in under 45 days.
• Absolute latest date to accept a contract for this program is 10/15/2009.  This loan takes at least 45 days to close, and must close by 12/01/2009 in order for your client to qualify for the $8000 tax credit.
• Final approval package, including appraisal, must be delivered to TDHCA 20 days prior to closing.  Buyers expectations must be set that all documentation has to be submitted correctly immediately.
• Contract must be complete and delivered immediately with all signatures and with the FHA/VA Agreement to Purchase Addendum signed and dated by all parties.