HOME Plus Down Payment Assistance Program Gets Facelift

HOME Plus Down Payment Assistance Gets Face Lift

HOME Plus Down Payment Assistance Facelift

HOME Plus Down Payment Assistance Facelift

The OIG/HOME in 5 investigation/aka – “witch hunt” (click HERE for more on HI5)  is directly impacting another well-known and frequently used down payment assistance program – HOME PLUS.  The issue the OIG had with HI5 was that the discount point charged was not being used to lower the borrower’s rate.  Not surprisingly, HOME PLUS has proactively adjusted their guidelines IMHO to avoid a similar fate.

What is New with Home Plus:

1.      No more origination fee charged by originating lender:
a.      BEFORE: Lenders were required to charge a 1% origination fee to all borrowers using the HOME Plus program
b.      NEW: Lenders will no longer charge a 1% origination fee to HOME Plus borrowers

Why the change: The master servicer of the HOME Plus program will now pay a higher revenue rate back to the Originating mortgage lender (called “SRP”).  This will create a situation where the originating lender no longer needs to charge the 1% origination fee to be profitable.

Benefit of the Change: In some cases (particularly the Conventional version of the program) the borrower may have more of the grant money available to be used toward down payment/closing costs and/or the buyer will not need to ask the seller for additional concessions to cover the 1% origination fee.

2.     New Grant Amounts:
a.      BEFORE: HOME Plus offered a grant equal to 4% of the loan amount
b.      NEW:  Several different grant rate levels will exist depending on down payment and loan type:

i.       CONVENTIONAL 95.01 to 97% loan to value: Grant will be 4% of the borrowers loan amount
ii.      CONVENTIONAL 95% loan to value or less: Grant will be 5% of the borrowers loan amount
iii.     FHA: Grant will be 3% of the borrowers loan amount
iv.     USDA: Grant will be 2% of the borrowers loan amount
v.      VA: Grant will be 2% of the borrowers loan amount

Eligibility for each program is County specific – please contact The HOUSE Team with any questions

3.     Increased max income limits:
a.      BEFORE: Max annual gross income allowed was $88,340 (for applicants not household)
b.      NEW: Max annual gross income allowed will be $89,088 (for applicants not household)

4.     Increased max Purchase Price Limit:
a.      BEFORE: Max purchase price was $353,360
b.      NEW: Max purchase price will be $356,352

5.       Residency Requirements:
a.      BEFORE: Must be a permanent resident
b.      NEW: Non-permanent residents allowed per Fannie/Freddie guidelines

When are the Changes Effective:

These changes are effective starting with loans where HOME Plus grant funds are reserved on or after August 17th,2015.  Also worth noting is that this program will soon be able to be paired with Freddie Mac Conventional loans in addition to just Fannie Mae currently.

I anticipate potential similar adjustments for the HOME in 5 program and will be sure to keep you posted as this all progresses.

By Jeremy House

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Jeremy is the Founder of The HOUSE Team and a Sr. Loan Officer/Branch Manager with PrimeLending. Over the past several years he has ranked in the top 1% of all loan officers nationwide and one of the top 200 loan officers in America. In the mortgage industry, the devil is in the details. Jeremy prides himself on being a student and an expert when it comes to everything mortgage related.

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