Help Your Clients Buy a Texas Home

Help Your Clients Buy a Texas Home

About TSAHC The Texas State Affordable Housing Corporation (TSAHC) is a housing nonprofit created at the direction of the Texas Legislature to serve the housing needs of low and moderate income Texans. Home Buyer Programs: Homes for Texas Heroes Home Loan Program Home Sweet Texas Home Loan Program

Home Buyer Programs These Home Buyer Programs offer two types of assistance to home buyers STATEWIDE.

Loans with Down Payment Assistance Several options are available to your borrower: 2% Assistance 3% Assistance 4% Assistance Assistance % is based upon total loan amount (i.e.: 5% of 100,000 5,000) No need to be first-time buyer Can be used to cover down payment and/or closing costs Fixed interest rate determined by DPA assistance amount 5% Assistance

Loans with Down Payment Assistance Option 1: Grant FHA, VA, USDA only True gift that never needs to be repaid 3% , 4% or 5% DPA options Option 2: 3-year Deferred Forgivable 2nd Lien FHA, USDA, VA or HFA Conventional Loan (HFA Preferred or HFA Advantage) 0% interest on 2nd Lien No monthly payments on 2nd Lien- Fully forgiven 3 years from closing Lower interest rates than grant 3%, 4%, or 5% DPA options

Loans with Down Payment Assistance HFA Conventional Loan TSAHC offers an HFA Conventional loan that have all the benefits of a traditional conventional loan with some added perks: Only 3% down payment required You can use either: Fannie Mae’s HFA Preferred Freddie Mac’s HFA Advantage AUS Requirements: DU required on Fannie -- LPA required on Freddie No upfront Mortgage Insurance (MI) premium MI can be cancelled

TSAHC Loan Comparison Calculator Example: 680 FICO, 170,000 sales price, 3% DPA Compare difference in down payment Compare Monthly MI differences Compare monthly payments

Loans with Down Payment Assistance A borrower using TSAHC’s DPA or DPA/MCC program may purchase any of the following types of homes: Government Loans (FHA, VA, USDA) New or existing homes Unit in a condo, townhouse, or PUD An entire duplex, triplex, or fourplex (one unit must be owner-occupied) Manufactured Homes (640 FICO) Not allowed: Rental homes, co-ops, investment properties, vacation and/or second homes.

Loans with Down Payment Assistance A borrower using TSAHC’s DPA or DPA/MCC program may purchase any of the following types of homes: Conventional Loans New or existing homes Townhomes, PUDs Condos (Follow Fannie or Freddie approval process as applicable) An entire duplex, triplex, or fourplex (Fannie Mae – HFA Preferred only) One unit must be occupied 3% borrower contribution required Not allowed: Rental homes, co-ops, investment properties, vacation and/or second homes.

Mortgage Interest Tax Credits Mortgage Credit Certificate (MCC) First-time buyers only (Waived for Qualified Veterans and Targeted Areas) Annual tax credit Must occupy the home as principal residence Debt-to-income ratio reduced so buying power increased FREE for Texas Heroes using our DPA program

Mortgage Interest Tax Credits Equal to 20% of the mortgage interest paid every year. Credit Example Loan Amount 260,000 Interest Rate 6.875% Interest Paid in 1st Full Year x 17,875 20% 3,575 No longer a 2k cap on credit earned! Effectively lowers your interest rate to 5.50%!! Lender may also add the 3,575 as income on 1003!!

Mortgage Interest Tax Credits What’s the difference between a tax credit and a tax deduction? Tax Credits Reduction of tax liability or taxes owed Tax Deductions Reduction of taxable income

Mortgage Interest Tax Credits An MCC allows you to take advantage of both forms of savings: All home owners may take deductions but tax credits are only available to holders of an MCC. In this example, they can take the remaining mortgage interest in the amount of 9,200 ( 11,500 - 2,300 credit) plus any property taxes, etc. as a deduction.

Mortgage Interest Tax Credits Home buyer receives a refund every year? They may still benefit. Payroll Income Tax Withholding Annual Tax Liability 10,000 Paid too much so they get a refund 14

Mortgage Interest Tax Credits Effect of an MCC on income tax liability Payroll IncomeThe 3,575 MCC goes in the bucket Tax Withholding before payroll deductions stayed the same Borrower refund increased by 2,300! Remaining Annual Tax Tax Liability Liability 6,425 10,000 15

Mortgage Interest Tax Credits Mortgage Credit Certificate (MCC) It’s the homebuyer’s responsibility to claim the mortgage interest credit on their federal income tax return every year. The credit cannot be larger than the annual federal income tax liability, after all other credits and deductions have been considered.

Mortgage Interest Tax Credits Any unused tax credit may be carried forward up to three years.

Mortgage Interest Tax Credits Example:

Mortgage Interest Tax Credits Mortgage Credit Certificate (MCC) The MCC can be used by itself or with our DPA program. If MCC is used with other mortgage loan product: o Must be fixed rate mortgage – no requirement on term or product o Lender can sell loan to any investor/servicer o No minimum credit score or maximum DTI requirements

Mortgage Interest Tax Credits MCC Requirement ONLY: Homebuyers using the MCC Program could potentially be subject to Recapture Tax if ALL three of the following occur: 1. Sell the home within 9 years, 2. Make a net profit on the sale, and 3. Income increases 5% every year borrower lived in the home

Important Takeaways No need to be a first-time buyer to use TSAHC DPA 2 DPA Options: TRUE GRANT or Low Interest 3-yr Deferred Forgivable 2nd Lien Not required to stay in the home any number of years Borrower can purchase anywhere in Texas. FREE MCC for Texas Heroes using DPA Turnaround times are fast!

How to Get Started Visit www.ReadyToBuyATexasHome.com to take the following steps: 1. Take the Eligibility Quiz 22

How to Get Started Visit www.ReadyToBuyATexasHome.com to take the following steps: 2. Carefully read your quiz results for additional details and next steps. 23

How to Get Started Visit www.ReadyToBuyATexasHome.com to take the following steps: 3. Contact an Approved Lender to Apply. 24

How to Get Started Visit www.ReadyToBuyATexasHome.com to take the following steps: 4. Take a Home Buyer Education Course (Online or In Person) 25

How to Get Started Visit www.ReadyToBuyATexasHome.com to take the following steps: 4. Find a Participating Realtor 26

Questions ENTER YOUR CONTACT INFORMATION HERE Visit www.ReadyToBuyATexasHome.com Call TSAHC’s Homeownership Hotline: (877) 508-4611 Email [email protected]