Help Your Clients Buy a Texas Home

1. Help Your Clients Buy a Texas Home

2. 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 www.ReadyToBuyATexasHome.com

3. Home Buyer Programs These Home Buyer Programs offer two types of assistance to home buyers STATEWIDE. www.ReadyToBuyATexasHome.com

4. Loans with Down Payment Assistance Three options are available to you: • Grants equal to 3%, 4%, or 5% of the total loan amount (i.e.: 5% of $100,000 = $5,000) • The lower the % of assistance, the lower the interest rate (Check website for rates) • Down Payment Grant is a true gift that never needs to be repaid • Grant may be used to cover the down payment and closing costs • No first-time home buyer requirement but it must be used for a primary residence • Borrower may choose from FHA, VA, USDA, or HFA Preferred Conventional Loan www.ReadyToBuyATexasHome.com

5. Loans with Down Payment Assistance • Only 3% down payment required • No upfront mortgage insurance (MI) premium • Lower minimum monthly MI rates • No Loan Level Pricing Adjustments (LLPAs) • MI can be cancelled The above calculations are based on a home sales price of $125,000 and a homeowner credit score of 720. This information is for loan scenario comparisons only and is not all-inclusive of costs associated with obtaining a mortgage loan. TSAHC offers a special Fannie Mae loan called HFA Preferred Conventional.It has all the benefits of a traditional conventional loan with some added perks: www.ReadyToBuyATexasHome.com

6. Loans with Down Payment Assistance • A borrower using TSAHC’s DPA or DPA/MCCprogram may purchase any of the following type of homes: • Not allowed: Rental homes, co-ops, investment properties, vacation and/or second homes. www.ReadyToBuyATexasHome.com

7. Mortgage Interest Tax Credits Mortgage Credit Certificate (MCC) • First-time buyers only (Waived for Qualified Veterans and Targeted Areas) • Annual tax credit worth up to $2,000 • Must occupy the home as principal residence • Debt-to-income ratio reduced so buying power increased • FREE for Texas Heroes using our DPA program www.ReadyToBuyATexasHome.com www.ReadyToBuyATexasHome.com

8. Mortgage Interest Tax Credits Mortgage Credit Certificate (MCC): Equal to 40% of the mortgage interest paid up to a maximum $2,000 a year. 40%=$2,250 $2,000 www.ReadyToBuyATexasHome.com

9. Mortgage Interest Tax Credits www.ReadyToBuyATexasHome.com

10. Mortgage Interest Tax Credits • An MCC allows you to take advantage of both forms of savings: • Using the previous example, they can take the remaining mortgage interest in the amount of $3,625 ($5,625 - $2,000 credit) plus any property taxes, etc. as a deduction www.ReadyToBuyATexasHome.com

11. 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 www.ReadyToBuyATexasHome.com

12. Mortgage Interest Tax Credits Effect of an MCC on income tax liability The $2,000 MCC goes in the bucket before payroll deductions Payroll Income Tax Withholding stayed the same Borrower refund increased by $2,000! Annual Tax Liability $10,000 Remaining Tax Liability $8,000 www.ReadyToBuyATexasHome.com

13. 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 www.ReadyToBuyATexasHome.com

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

15. Mortgage Interest Tax Credits Example: www.ReadyToBuyATexasHome.com

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

17. 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: • Sell the home within 9 years, • Make a net profit on the sale, and • Income increases 5% every year borrower lived in the home www.ReadyToBuyATexasHome.com

18. Mortgage Interest Tax Credits • A borrower using TSAHC’s MCC program may purchase any of the following type of homes: • Not allowed: Rental homes, co-ops, investment properties, vacation and/or second homes. www.ReadyToBuyATexasHome.com

19. Program Fees & Compensation Program Fees: Lender Compensation: • Lenders may collect all reasonable and customary fees and closing costs for either program  • All fees and charges must be listed on the Closing Disclosure www.ReadyToBuyATexasHome.com

20. How Does an Individual Qualify? • Profession and Income and Purchase Price Limits www.ReadyToBuyATexasHome.com

21. Income Examples • Borrower cannot exceed income based on County • DPA Only – only 1003 qualifying income considered • MCC or DPA/MCC -household income considered (those that would sign deed of trust) www.ReadyToBuyATexasHome.com

22. How Does an Individual Qualify? • Underwriting/Credit Requirements: Borrowers are required to meet standard underwriting requirements. We have the following overlays for our DPA program ONLY: • No MAX DTI on AUS approval! www.ReadyToBuyATexasHome.com

23. How Does an Individual Qualify? • Borrowers need to complete a homebuyer education course prior to closing on the home loan. • A homeowner is 33% less likely to fall behind on their mortgage if they’ve taken a home buyer education course • Met by attending a session through TSAHC’s network of housing counseling agencies • Visit www.texasfinancialtoolbox.com to find a course near your borrower • There may be a cost associated with this course. www.ReadyToBuyATexasHome.com

24. Type in City www.ReadyToBuyATexasHome.com

25. How Does an Individual Qualify? • Work with an approved participating lender • MCC Requirement ONLY: • First time home buyers – Defined as anyone who hasn’t had ownership interest in a principal residence in the last 3 years. www.ReadyToBuyATexasHome.com

26. How Does an Individual Qualify? Unsure if a client qualifies? Take the Eligibility Quiz under the Home Buyers & Renters section of our site at www.ReadyToBuyATexasHome.com.

27. Use this slide and additional slides if needed, to promote yourself as one of TSAHC’s preferred lenders or Realtors.

28. Important Takeaways www.ReadyToBuyATexasHome.com

29. www.ReadyToBuyATexasHome.com

30. Brochures www.ReadyToBuyATexasHome.com

31. Fillable Flyers www.ReadyToBuyATexasHome.com

32. 10 Step Checklists www.ReadyToBuyATexasHome.com

33. Questions ENTER YOUR CONTACT INFORMATION HERE • www.ReadyToBuyATexasHome.com • TSAHC’s Homeownership Hotline(877) 508-4611 • or email Homeownership@TSAHC.org www.ReadyToBuyATexasHome.com