MHDC is able to have down payment assistance to persons buying a home with the MHDC Bond program regardless of whether or not you are a first time home buyer in some specifice counties in Missouri. This is fantastic news because these counties are now classified as a targeted area since we had some flooding in Missouri.
How the program works - MHDC Cash Assistance Program Example
You have a client buying a $100,000 home - we can do a FHA, VA or RD loan that would allow them to minimize their down payment and combine with the MHDC cash assistance program to minimize cash injection into the property. An example follows:
Purchase price 100,000
FHA financing - 97000 (3 % down payment) soon to be 3.5% down payment required.
leaves down payment amout of 3000.00 required - + closing costs
MHDC forgivable second - $2,910 (3% of the loan amount not the sales price)
This is all but $90.00 of the loan amount, and it is given in the form of a forgivable second. The forgivable second is a recorded second mortgage with 0 interest rate - and each month 1/60th is forgiven after 5 years the second is then released by the lender. This would = 2,910 / 60 or $48.50 per month.
This 48.50 is not a payment your client makes it is forgiven each month, since it is a forgiven debt the IRS says this is realized income so your client in our example would have to pay taxes on the forgiven amount each year in our example thats extra income on $582.00 or 48.50x12 months.
The closing costs in this example would be the only thing the buyer would have to come up with or the seller could pay the closing costs based on the contract negotiations.
Please note when doing this option with a VA or RD loan our loan amount is 100% and the forgivable grant would cover all of the closing costs and possibly result in the reduction of the loan amount if the forgivable second was more than closing costs.
Its a great program and we have utilized this for a number of years in targeted counties in Missouri we are seeing that this is now available whether your client is purchasing their first home or not.
**Important NOTE- anyone financing a home with tax revenue bonds will NOT be eligible to also take the $7,500 tax credit/loan in April, please note this because there could be a different loan program that we can utilize that would still enable you to do the credit.
For more information regarding this program please feel free to contact me at
417 447 7927