San Antonio Board Of Realtors

San Antonio Board Of Realtors

March 26, 2013

Texas Dept. of Housing& Community Affairs (TDHCA)

TDHCA is the state agency responsible for affordable housing, community and energy assistance programs, colonia activities, and regulation of the state's manufactured housing industry.

TDHCA's mission is to help Texans achieve an improved quality of life through the development of better communities.

The Department currently administers $2 billion through for-profit, nonprofit, and local government partnerships to deliver local housing and community-based opportunities and assistance to Texans in need.

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Texas Homeownership Division

The Texas Homeownership Division is responsible for the administration of the departments homeownership programs, which are designed to assist the low-to moderate income first time homebuyer.

Two types of assistance are made available to first time homebuyers: Low interest mortgage loan with down payment/closing

cost assistance Mortgage Interest Tax Credit available through the

issuance of a mortgage credit certificate.

Both types of assistance can be combined to realize the maximum benefit for the first time homebuyer.

In 2012, TDHCA was able to assist approx. 2,852 homebuyers (approx. $360 million in mortgage loans) through these two options.

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Texas Mortgage Credit Certificate Program (MCC)

A MCC is a non-refundable federal income tax credit designed to assist persons to better afford individual ownership of housing.

A MCC provides the homebuyer the ability to take an annual tax credit of up to $2,000, as long as they occupy the home as their principal residence.

The annual tax credit is based on the mortgage interest paid each year, and is calculated at 35% of the interest paid.

A MCC is a true “tax credit” that entitles taxpayers to subtract the amount of the credit from their total federal income tax liability, receiving a dollar for dollar savings (different from the mortgage interest deduction).

The MCC has the potential of saving the first time homebuyer thousands of dollars over the life of the loan.

Current available funds: Approx. $185 million

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MCC Calculation Example

Mortgage Amount:$132,000.00 Interest Rate: 4.0% Annual Interest Paid: $

5,280.00 TDHCA MCC Rate: x

35% MCC Tax Credit: $

1,848.00

Remaining $3,432 ($5,280 - $1,848) can be used as a mortgage interest tax deduction, which will lower the taxpayers taxable income, therefore reducing their tax liability.

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How does an individual/family qualify?

First Time Homebuyer Requirement – Homebuyer(s) using the program cannot have had a present ownership interest in any principal residence during the last three years.

Income and Purchase Price Limit Requirement – Homebuyer(s) income cannot exceed the income and purchase price limit for the area the property is located in. Limits based on county and household size.

Underwriting/Credit Requirements – Homebuyer(s) must meet standard mortgage underwriting requirements as determined by the lender.

Complete a homebuyer education course– in person/face-to-face course or online course acceptable; must provide a certificate of completion to lender prior to closing.

Secure mortgage loan through an approved participating lender – a list of participating lenders can be found on the TDHCA website – www.myfirsttexashome.com.

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Income/Purchase Price Limits

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Exemptions

The homebuyer(s) may be exempt from the first time homebuyer requirement if: Homebuyer or spouse is a qualified veteran, honorably

discharged as evidenced by DD-214 discharge papers. Purchasing in a Targeted Area – maps of targeted

areas available on TDHCA website.

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Property and Loan TypesEligible property types: New or existing single family residences Duplexes (one unit must be owner-occupied) Condominiums and townhomes Manufactured home (FHA approved) Not allowed: Rental homes, co-ops, investment

properties, vacation and/or second homes.

Loan types – must be a 15 or 30 year fixed rate: FHA USDA/RHS VA Conventional (not allowed for 79 Program)

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MCC – the Gift that keeps on GIVING…

The MCC can be used to gross up income or qualifying ratios for the borrower (if allowed by loan product guidelines and investor guidelines).

The MCC can reduce federal income taxes owed.

Because of the potential tax savings, a MCC holder may adjust their W-4 withholdings with their employer.

With less money withheld for taxes, the MCC holder receives more take-home pay.

May be combined with the TDHCA My First Texas Home – 79 Program (DPA), or any other local/state DPA program, to provide homebuyer the maximum benefit. -Must be a participating lender in both programs to offer both options.-Must follow most restrictive guidelines

The homebuyer has the ability to take the tax credit each year for the life (term) of the mortgage loan, as long as they occupy the home as their principal residence.

The amount of tax credit is equal to the MCC rate as a percentage of the annual mortgage interest paid. The remaining percentage of the annual mortgage interest paid is typically itemized on the federal tax return (mortgage interest deduction).

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MCC – Important Highlights The MCC only provides a benefit to the borrower if: 1. owe

federal income taxes (tax liability based on taxable income); 2. include the MCC when filing their tax returns.

The Mortgage Interest Credit (MCC) is a non-refundable tax credit, meaning if the borrower does NOT owe taxes in any year, the credit has no value that year.

The home MUST remain principal residence. Only available during the term of the mortgage loan. The actual value of the MCC, if any, depends on the MCC

holder’s personal tax situation. The credit does not reduce what the borrower actually must

pay on their mortgage. It can, however, provide more take-home pay that can be applied toward mortgage payments.

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MCC – Important Highlights

Borrowers should consult with a tax professional about the value of the MCC.

Recapture tax may apply if criteria is met. All 3 conditions/criteria must be met to be subject to recapture tax.

Homebuyers can refinance their MCC loan and continue to claim the tax credit (MCC must be reissued by TDHCA).

Low fees- currently $75 MCC Commitment Fee; 1% MCC Issuance Fee.

No minimum FICO requirement or max DTI requirement on TDHCA MCC (check loan product guidelines and investor guidelines for credit overlays).

2012 Statistics –

795 MCCs issued = to $106 million in mortgage loans;

Average loan amount $131,691; Average purchase price $136,174

Top originating counties: Harris, Bexar, Tarrant, El Paso, Dallas

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TDHCA My First Texas Home – Program 79

Low interest rate loan with down payment assistance Provides a 30-year fixed-interest rate mortgage loan; Provides down-payment and closing cost assistance of 5%;

assistance provided as a deferred-repayable 2nd loan – no interest, no payments, due in full at sale of home, refinance, or payoff of 1st mortgage.

Available Funds and Rates Available Funds - $600 million (continuous funding) Interest Rate – ___% * Current DPA – 5% of the loan amount *Interest rates for the My First Texas Home – Program 79 are based on current market conditions and are subject to change. Current rates can be found on the TDHCA website – www.myfirsttexashome.com

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TDHCA My First Texas Home – Program 79

Uses same guidelines as Texas Mortgage Credit Certificate (MCC) Program:

First time homebuyer requirement, Income and purchase price limits; Property types; Pre-purchase homebuyer education; veterans exemption; targeted areas; available Statewide (any county).

Loan products allowed – FHA, VA, USDA/RHS Underwriting/Credit Requirements – Must meet standard

mortgage underwriting requirements as determined by the lender. However, certain credit overlays may apply.

Min. FICO requirement – 640No Max. DTI requirement (at this time)

Available only through a participating lender US Bank, NA serves as programs Master Servicer

– all loans will be sold to and serviced by US Bank.

2012 Statistics

2,057 household served= to $254 million in mortgage loans;

Average loan amount $122,749; Average purchase price $125,768;

Top originating counties: Harris, Bexar, Tarrant, El Paso, Dallas

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www.MyFirstTexasHome.com

Find a participating lender

Check the maximum income and purchase price limits

Census tract locator (for targeted areas)

Request marketing materials

Current balance of “available funds”

Call 1-800-792-1119

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More Information on TDHCA… WWW.TDHCA.STATE.TX.US

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Stay in touch with TDHCA…

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Contact InformationTEXAS DEPARTMENT OF HOUSING

AND COMMUNITY AFFAIRS

221 E. 11th Street, Austin, TX 78701

Phone: (512) 475-3800 - Toll Free: (800) 525-0657

Web: www.tdhca.state.tx.us

Texas Homeownership DivisionEric Pike, Director – (512) 475-3356 – [email protected]

Cathy Gutierrez, Program Manager – (512) 475-0277 [email protected]

Web: www.MyFirstTexasHome.com

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