Minnesota Housing has announced several changes to their program effective December 18, 2012. The major changes include a program for move up buyers and two options for down payment assistance.
For first time homebuyers, the options will be similar to the current program. It will be called the Start Up Program. This is for first time homebuyers only, the mortgage programs will continue to be FHA, conventional, VA and RD loan programs. You will need to attend a first time homebuyer program (Homestretch). The minimum credit score is 640. There are debt to income limits of 45% with a credit score between 640 and 659. At 660 and above, the maximum debt to income ratio is 50%. The loan is still subject to recapture tax if you sell the home within 9 years.
The down payment assistance program will vary. You will have an option of a deferred payment loan (similar to the old "HAF" program) or a new monthly payment program. The deferred payment loan wll be a loan of up to $3000 or 3% of the purchase price, whichever is greater. The borrower must contribute $1000 or 1% of the purchase price, whichever is lower. After closing you are limited to $8000 or 8 months of PITI (monthly payment) of liquid assets. Retirement accounts are not limited.
The monthly payment loan for down payment assistance will be a 10 year term, the interest rate will be the same as the first mortgage rate. The loan amount will be $5000 or 5% of the purchase price, whichever is greater. There isn't a liquid asset limitation with this program.
If you are using a conventional mortgage with mortgage insurance, the monthly payment program is the only down payment assistance program available.
For those that have owned a home in the past, there is a new program called Step Up. This program will allow those that have owned a home in the last three years to get down payment assistance. The income limits, credit scores, etc are the same with the Step Up program. The down payment assistance program allowed is the monthly payment program. Because the Step Up program is not a bond program, these loans are not subject to recapture tax.
These programs will not be available until December 18th, until then MN Housing will be using the current programs.
If you need more information, there will be more information on MN Housing's website which is www.mnhousing.gov. You can also contact me or any other loan officer that is using the program for additional information.
