Federal and local government agencies are allocating millions of dollars toward efforts to improve the housing market, and first-time homebuyers can benefit from a variety of down payment assistance programs — if they hurry.
“Realtors and lenders need to do a better job getting the word out. A lot of these programs are time-sensitive,” said Angela Grantham, a mortgage specialist with Prospect Mortgage. “The government funds these programs, and they last to a certain date or until the money runs out.”
Grantham said some programs, such as those provided through the District of Columbia’s Neighborhood Stability Program, have run out of funds already; other programs expire by the end of this year.
“There’s still plenty of funding available [in Alexandria],” said Shane Cochrane, division chief of the city’s Department of Housing Program Implementation. “The City Council has been dedicated to the housing programs. We have $15 million this year, and are going for another $7.7 million for next year.”
In fact, if you live and work in Alexandria, and are a first-time homebuyer, a program scheduled to start in the next few weeks will make new work force homes available within minutes of Old Town. Alexandria Crossing will feature homes from $300,000 to $365,000 and will include a purchase subsidy of up to $20,000.
Many state and local governments have introduced their own programs to help buyers directly or to assist them with accessing the federal tax credit in time for closing.
The Virginia Housing Development Authority created the Homebuyer Tax Credit Plus program in June. This program expires Nov. 30. It guarantees affordable fixed-rate financing on a mortgage and offers a second mortgage to pay the down payment and closing costs.
Grantham said the best thing about the VHDA tax credit program was the options borrowers had in paying back the loan. These options include: Paying off the second mortgage with the federal tax credit to instantly build equity in a home or paying off the second mortgage over 29 years — thereby saving the tax credit for things such as paying off debt, setting up an emergency fund or making home improvements.
“No question that VHDA is the nation’s role model among all HFAs,” writes Jill Landsman, communications director of the Northern Virginia Association of Realtors, in an upcoming article. “The VHDA currently writes 32 percent of its loan products to homebuyers in the Northern Tier, which encompasses a region that includes Greater Northern Virginia. In 2005, that loan volume was only 15 percent.”
Much of the funds flowing to local governments for down payment support come by way of the Neighborhood Stabilization Program, established under Title III of Division B of the Housing and Economic Recovery Act of 2008. This law provides emergency assistance to states and units of local governments for the purchase of abandoned and foreclosed homes.
Prince William County, the jurisdiction hardest hit by foreclosures in Virginia, has its own down payment program, which allows borrowers to get a $30,000 grant they can use to pay for repairs after buying a foreclosed home. “This was developed because a lot of times buyers would purchase the house but could not afford the repairs necessary on some of the foreclosed properties,” Grantham said.
To qualify, buyers must have a minimum 620 credit score. “In the past if the husband had 720 and the wife had 619, we could still do it. Not anymore,” Grantham said. “We now must take the middle credit score from both, and they both must be 620 or better.”
Prince George’s County Department of Housing and Community Development started the “Down Payment on Your Dream” initiative in July. This program aims to provide down payment and closing cost assistance to eligible homebuyers for foreclosed homes.
The Employer Assisted Housing Program in the District provides assistance to D.C. employees who are first-time homebuyers purchasing in Washington. Employees of District government agencies may be eligible for matching down payment funds of up to $1,500 and a deferred loan of up to $10,000.
The Housing Opportunities Commission in Montgomery County offers below-market mortgage financing to the general public for purchasing a first home in the county. All loans have income requirements and no points. There are fixed-rate and step-rate loans available.
“It’s working very well,” said Shelly Murray, manager of Weichert Realtors.
“There is so much out there, and a lot of it is available to everybody,” Grantham said. “Even with all this information out there, people just don’t know what’s available to them.”
This is what prompted Falls Church ReMax agent Ciara Lascano to post all existing programs in the D.C. metro area on her Web site last month. “The programs are all still available,” she said.
