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Florida Housing Finance Corporation. FIRST TIME HOMEBUYER PROGRAM. 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 850.488.4197 www.floridahousing.org. First Time Homebuyer Program Staff. Sandy Gaver Manager, Single Family Programs Sandy.Gaver@floridahousing.org
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Florida HousingFinance Corporation FIRST TIME HOMEBUYER PROGRAM 227 North Bronough Street, Suite 5000 Tallahassee, Florida 32301 850.488.4197 www.floridahousing.org
First Time Homebuyer Program Staff Sandy Gaver Manager, Single Family Programs Sandy.Gaver@floridahousing.org 850-488-4197 x 1143 Chip White Administrator, Single Family Programs Charles.White@floridahousing.org 850-488-4197 x 1203
Defining Bond What is “Bond” and how is Florida Housing’s First Time Home Buyer Program different from other programs that offer down payment assistance?
Defining Bond Bond refers to first mortgage programs that generally serve first time homebuyers and which are funded from the proceeds acquired through the sale of mortgage revenue bonds (MRBs). These MRBs are sold to investors at lower rates of return because the interest is exempt from federal taxes and are generally low risk investments. MRB (better known as “bond”) programs were created by Congress in an effort to help finance affordable housing. Bond programs DO NOT use public funds and are generally offered through local or state housing finance agencies, like Florida Housing.
Defining Bond Bond = First Mortgage Down Payment Assistance = Second Mortgage
Florida Housing’s Role as aState Housing Finance Authority Florida Housing Finance Corporation is the state housing finance agency. Which means, the First Time Home Buyer Program is offered throughout the entire state of Florida and not limited to specific counties, cities or jurisdictions. Florida Housing’s First Time Home Buyer Program is often referred to as the “state program”. There are also local housing authorities located throughout Florida that serve specific counties and markets. Florida Housing does NOT govern these agencies.
State Housing Authority vs.Local Housing Authority There are 11 local housing finance authorities (HFAs) located throughout Florida. Each HFA offers a program for first time homebuyers. Each program may have similar requirements (like requiring 3 years’ tax returns for borrower and spouse) but be cautious because no two programs are identical. There can be significant differences with rate, homebuyer education requirements, DPA, and bond documents.
Housing Finance Authority vs.State Housing Initiative Partnership (SHIP) Although Florida Housing offers down payment assistance, the First Time Homebuyer Program is a FIRST MORTGAGE PROGRAM. Down payment assistance is offered as a second mortgage. Many county or city housing finance agencies or non-profit agencies, like SHIP, offer stand alone DPA. Florida currently has over 120 SHIP offices. Most of these agencies work directly with the borrower(s) to determine eligibility as well as fund their DPA. Some offer DPA in the form of a second (or third) mortgage and some offer subsidy that is forgiven or provided as a grant.
The First Time Homebuyer Program’sImpact on Homeownership in Florida • In 2010, the First Time Homebuyer Program helped 4,283 Floridians attain homeownership. • $430,663,293 provided in first mortgage assistance. • $29,133,338 in down payment and closing cost assistance provided. • Since 2002, over 24,464 Floridians have attained homeownership through our Program. • $2,625,788,395 provided in first mortgage assistance. • $204,900,170 in down payment and closing cost assistance provided.
Florida Housing’s First Time Homebuyer Program • This is a first mortgage program that offers down payment assistance in the form of a second mortgage. Florida Housing determines the rate and term of all first mortgage products and second mortgage products. • Down payment assistance is REPAYABLE. It is not forgiven nor provided as a “grant”. • Florida Housing is not a bank. All loans are originated, underwritten, closed and funded by our participating lenders. • Borrowers must be first time homebuyers (some exceptions apply) and satisfy income and purchase limits.
First Mortgage Products Florida First Military Heroes 30-year term Fixed 4.25% rate as of 10/27/11. Zero discount or origination • 30-year term • Fixed 4.50% rate as of 10/27/11. • Zero discount or origination
Down Payment Assistance & Second Mortgage Products Florida Assist HAMI Provides $5,000 in DPA 5.00% rate 10-year, amortizing loan Buyers who qualify for FL First automatically qualify. • Provides up to $7,500 in DPA • 0.00% rate • 30-year deferred loan • For buyers at 100% of AMI or below.
The Basic Requirementsfor Borrowers • Buyers must be first time home buyers (some exceptions apply) AND • Buyers must income qualify. Income limits are set by county. • Buyers must complete a face-to-face, 6-8 hour home buyer education class. • Borrower must qualify for a first mortgage using standard Agency guidelines (FHA, VA, USDA-RD, Fannie, Freddie). • Buyers must have a minimum 620 FICO. • Must occupy the property as primary residence within 60 days of purchase.
First Time Homebuyer Defined To qualify as a FTHB, borrowers must meet ONE of the following criteria below: 1) had no ownership interest in a primary residence for the last 3 years. 2) will be purchasing in a federally designated targeted area. 3) exempt through the Veteran’s Exception. If borrower meets one of the 3 criteria, then borrower must provide documentation to validate eligibility.
Veterans Exception • For the First Time Homebuyer Program, a “veteran” is defined as “a person who served in the active military, naval, or air service, and who was discharged or released there from under conditions other than dishonorable”. • Veterans have a permanent exemption to the first time homebuyer requirement.
The Cost Benefits tothe First Time Homebuyer • Buyers are exempt from paying doc stamps on the note and intangible tax. Doc stamps on deed are not exempt and must be paid by seller. Exception: REO by Fannie, Freddie, HUD or bank. Buyer may then pay. • FL Housing caps lender fees and prohibits realtor transaction fees on all loans. • Offers down payment assistance which helps with closing costs and prepaids. Other subsidies may also be used with our first mortgage. • Low, fixed rate, 30-year mortgage.
Income Requirement • IRS regulations require lenders to consider Household Income which is defined as all income from all persons that will live in the home. • This includes persons that are not on the loan, including fiancés, children over the age of 18 that are not in school, parents, grandparents, etc.
Property Requirements • Purchase price limits set by county. • 1 – 4 units eligible. • New & existing properties eligible. • Attached, detached, condos, townhomes & manufactured homes eligible.
Mortgage Credit Certificate Program(April 2012) • A Mortgage Credit Certificate (MCC) is a federal income tax credit designed to provide housing assistance to families of low and moderate income. It is an alternative to the Mortgage Revenue Bond Program (First Time Homebuyer Program). • The MCC is not available with first mortgage loans originated through the First Time Homebuyer Program. Lenders retain all first mortgage loans originated with the MCC. • First time homebuyer requirements still apply.
Mortgage Credit Certificate Program • An MCC allows the qualified first time homebuyer to claim an itemized income tax deduction for the amount of interest paid each year on the mortgage loan. The deduction reduces the amount of income that is taxed. A portion of the interest paid is then subtracted from the actual amount of tax owed. This “tax credit” provides a dollar-for-dollar reduction in taxes. • The homeowner can save thousands of dollars as long they occupy the property as their principal residence.
Tax Credit vs. Tax Deduction A TAX CREDIT entitles taxpayers to subtract the amount of the credit from their total federal income tax liability, thereby receiving a dollar for dollar savings. A TAX DEDUCTION is subtracted from the adjusted gross income before federal income taxes are computed. Therefore, with a deduction, only a percentage of the amount deducted is realized in savings.
Benefits of the MCC Programfor Homebuyers • Borrower claims the credit with their annual tax return using IRS Form 8396 and the credit may be claimed for the life of the loan if borrower occupies the property as their principal residence. • The borrowers may, if they choose, adjust their W-4s to reflect the anticipated credit. • The anticipated credit may be used to help qualify the borrower for a loan. If the tax credit is $2,000.00, the increase to borrower’s monthly income would be $166.67 per month.
