First-Time Homebuyer Program Who is Eligible? 1. Actual first-time homebuyers 2.Buyers who have not had an ownership interest in a principle residence within the last 3 years 3. Anyone buying in a “Target Area” (this includes previous homeowners ) 4. Veterans
Who Invests in OHFA Bonds? INSURANCE COMPANIES FINANCIAL INSTITUTIONS BOND FUNDS MONEY MARKET FUNDS TRUST ACCOUNTS INDIVIDUALS
LOAN PROGRAMS Mortgage Revenue Bond (MRB) Government Loans (FHA, 203k, VA, USDA-RD) Conventional Loans Financial Assistance Options 2.5% Down payment Assistance Grant Grants for Grads Second Mortgage
LOAN PROGRAMS Program details: 30-year fixed rate loans* Owner occupied, primary residence Multifamily dwellings –1 to 4 unit Non-traditional credit permitted Acreage limits –2 acre limit within a municipal corporation –5 acre limit outside a municipal corporation (Documented exceptions considered)
LOAN PROGRAMS Program details: Home purchase options: Existing Modular Manufactured Spec homes New Construction
LOAN PROGRAMS Program details: Home purchase options: Manufactured Homes: – Must be attached to the foundation – No transportation apparatus – Titled as Real Property –(Not through Bureau of Motor Vehicles)
LOAN PROGRAMS Program details: Home purchase options: Spec homes New Construction – 90% complete – Certificate of occupancy issued – Owner must occupy within 60 days of closing
LOAN PROGRAMS Ohio Heroes program.25% Rate Reduction on current rate for: Active Military Veterans Law Enforcement Public Safety Teachers Healthcare Full Time employment* State license or Certification
LOAN PROGRAMS 203 K & Streamline loans available Housing Choice Vouchers (aka: Sec 8) Other Government Loans:
LOAN PROGRAMS OHFA Credit Score Requirements: 600 without OHFA financial assistance 620 with OHFA financial assistance Credit Scores: 2007 average = 690 2009 average = 650 2010 average = 665
Sources of Household Income All Income from all adults (18 years and older) living in the home Social Security Medicaid Food Stamps Unemployment VA benefits Child Support Alimony Inheritance Insurance policies Lottery winnings Wages, Tips & Overtime Income from Partnerships Business profits
OHFA Assistance Grant Grant equal to 2.5% of purchase price Interest rate is.5% higher than unassisted mortgage rate. Used for down payment or closing costs. No requirement for repayment. Homebuyer Education required
Target Area A HUD-designated economically distressed area Most counties have target and non-target areas Income and purchase price limits are higher in target areas Do not have to be a “first-time” homebuyer
Federal Recapture Tax IRS regulation Recapture Tax not just for real estate IRS Publication 523, Form 8828 Must meet requirements for recapture tax to apply
Federal Recapture Tax When does recapture apply? 1.The home is sold or otherwise disposed of within the first 9 years of ownership. AND 2. The home is sold at a profit. AND 3. The homeowner’s income at the time of sale exceeds the adjusted qualifying income. (adjusted up apx. 5% per year.)
Federal Recapture Tax Maximum 6.25% of net profit
Federal Recapture Tax OHFA Recapture Reimbursement Program OHFA will reimburse homebuyers for the full amount of recapture tax paid to the IRS on loans closed on or after March 1, 2006.
Federal Recapture Tax What if... Sales price $ 125,000 Purchase price - $ 105,000 Gross profit = $ 20,000 6% Real estate commission- $ 7,500 Net profit = $ 12,500 X 6.25% Recapture tax = $ 781.25
Ohio Housing Finance Agency Mortgage Credit Certificate (MCC) Program
Current Guidelines $2000 Maximum mortgage interest credit per year Borrower must owe taxes to the IRS at the end of each year after credits and deductions.
Current Guidelines Annual tax credit rates: – (20%) Credit for non-target areas – (25%) Credit for target areas – (30%) Real estate owned (REO) Credit is valid for each year of homeownership
Current Guidelines Applicants Must: Use an OHFA participating lender Qualify under the current First-Time Homebuyer Program guidelines
Current Guidelines MCC Program Exceptions Ownership status of borrower* If the applicant has owned a mobile home in the past regardless of how it was titled, (BMV or as real property) the applicant is considered to be a homeowner and is not eligible for the MCC program unless purchasing in a Target area. One-unit single family home purchases
Current Guidelines Two options for credit: End of the year tax credit Adjusting W-4 withholding Buyers are strongly encouraged to consult a tax professional for advice on claiming the credit.
Current Guidelines Lenders: Must be able to originate, underwrite, close & fund loans Will combine with their own loan product Must use a “fixed rate” loan product May permit borrower to buy-down the interest rate
Current Guidelines Rate cannot be 100 basis points or more above the current Freddie Mac Primary Mortgage Market Survey (PMMS)
Federal Recapture Tax OHFA will reimburse homebuyers for the full amount of recapture tax paid to the IRS on loans closed on or after March 1, 2006.
Reservation & Commitment Timeline Type: ReservationCommitment Existing 60 days30 days New 90 days60 days REO 120 days90 days
Issuance Lender Receives: –MCC certification letter –lender duties –Copy of Certificate Borrower Receives – Congratulatory letter – How to claim credit – OHFA and IRS websites – Original MCC document
Reissuance If Borrower Refinances: One year to request new certificate Must be reissued to original holder(s) –MCC credit non-transferable Original Certificate becomes void MCC credit percentage will not change Review IRS Publication 530
MCC Exercise If the first year of interest on a $100,000 loan is $6,467.09, how much credit would the borrower be able to claim the first year?
MCC Example $6467.09 $1293.42 Annual Interest x % = yearly credit 20% 25% 30% $1616.77 $1940.13
Ohio Housing Finance Agency Grants for Grads Second Mortgage Program
Grants for Grads Second Mortgage Purpose of Program: –Offer financial incentive to recent college graduates toward the purchase of a home in Ohio. –Encourage Ohio residents to return to or stay in Ohio.
Grants for Grads Second Mortgage The Grants For Grads Program provides down payment assistance equal to 2.5% of the home purchase price in the form of a forgivable second mortgage. CURRENT MORTGAGE RATE: 4.50%
Grants for Grads Second Mortgage Homebuyer Qualifications: Follow First Time Homebuyer Guidelines Single family home purchases only Primary residence of borrower Borrower must occupy home within 60 days of closing
Homebuyer Qualifications Ohio Resident at time of High School Graduation, Graduate from an Ohio High School or Proof of parent’s residency at time of high school graduation GED not eligible at this time Graduate from any accredited college or university
Homebuyer Qualifications College Graduation: Receive one of the following degrees within the 18 months from a college or university: - associate - bachelors - masters - doctoral Proof of graduation - Diploma from high school and college/university
Grants for Grads Second Mortgage What about a degree from a “Technical College”? The Ohio Board of Regents has determined that a degree from an approved Technical College is equal to an associates degree.
Grants for Grads Second Mortgage Program details: Interest rate is same as OHFA unassisted Rate (currently 4.50%) Homebuyer Education required Income limit is 140% of area median income Program cannot be combined with other OHFA down payment programs or Ohio Heroes.
Grants for Grads Second Mortgage Repayment Repayment of second mortgage required if: -borrower moves out of Ohio within first five years. Repayment of second mortgage is not required if: -borrower sells the house but stays in Ohio.
Ohio Housing Finance Agency Homebuyer Education Program
OHFA Homebuyer Education Purpose: Educate borrowers about the home buying process Provide additional educational resources to improve chances of success as a homeowner.
OHFA Homebuyer Education Who is required to use Homebuyer education? OHFA borrowers requesting additional financial assistance from OHFA.
OHFA Homebuyer Education Process: Borrower should have a loan reserved with OHFA Access the OHFA website and review and complete the required documents –Homebuyer Guide –25 question test – Budget worksheet
OHFA Homebuyer Education Two options: Courses offered through HUD-approved housing counseling agencies -OR- OHFA Streamlined education program
OHFA Homebuyer Education 33 HUD approved Counseling Agencies: Available for all 88 counties Counselor will complete counseling and send certificate to OHFA OHFA will upload the certificate and notify lender
OHFA Homebuyer Education OHFA Streamline Education: Borrower sends test and budget to OHFA OHFA one-hour telephone counseling session with buyer OHFA will upload the certificate and notify lender $75 fee to borrower
Ohio Housing Finance Agency New Home Sweet Home Program
Ohio Housing Finance Agency Purpose: To provide qualified homebuyers the same opportunity to secure a low-interest OHFA loan for a “new-construction” home to be built.
Ohio Housing Finance Agency Program follows First Time Homebuyer Program guidelines Qualified borrowers are eligible for 2.5% Assistance Grant Lender reserves loan with OHFA and performs underwriting Interest rate is “locked” at time of reservation Interest rate is.25% higher than unassisted rate (currently 4.50%) Interest rate is locked throughout the building process Details:
Ohio Housing Finance Agency Additional requirements: Single family property construction only Builder has 180 days total: 150 days to complete construction; 30 days to close Homebuyer education required Additional information on OHFA website: www.ohiohome.org www.ohiohome.org
OHFA Conference Ohio Housing Conference November 29- December 1, 2011 Columbus Convention Center Sponsored by: The Ohio Housing Finance Agency (OHFA) & The Ohio Capital Corporation for Housing (OCCH)