The FAR Office of Public Policy has been getting a lot of questions from across the state regarding downpayment assistance for those who qualify for the federal first time homebuyer tax credit. Given that there is a state downpayment plan and a federal downpayment plan (and at least one special exemption) it definitely gets confusing, and details have been slow to emerge. Many of you are finding that local housing authorities just don't have all of the information they need to move forward and some are reporting that bankers are steering clear of the downpayment assistance programs. We have some brand new information for you tonight (see bold).
The state program was passed during the recent legislative session as part of the 2010 budget. That bill takes effect July 1, 2009 (tomorrow). The downpayment assistance program that is specific to Florida is the Florida Homebuyer Opportunity Program (FLHOP). The federal program is through FHA.
The state program, FLHOP, is intended to help Floridians maximize the $8,000 federal first-time homebuyer tax credit by allowing local housing authorities to make "bridge loans" to consumers.
If the local housing authority is the originator of the loan this tax credit may be used as part of the downpayment. In fact, Florida Housing Finance Corporation has received word from FHA that borrowers who access the $8,000 tax credit through a state or local government program may use it to make up the required 3.5% downpayment. Those who access through any other FHA-approved lender must (as with any standard FHA loan) provide the 3.5% themselves which you can read more about below.
For local housing authorities this program is very similar to SHIP - with one major difference - the income limits. Currently, SHIP uses Area Median Income (AMI) and those are typically lower, and calculated differently, than the federal tax credit limit of $75,000. The $75,000 for a single income tax filer, and $150,000 limit for joint filers, will be used for this program.
Florida Housing Finance Corporation (FHFC) insists they are training the local administrators on how to proceed with this program. Local housing authorities will have the ability and flexibility to amortize this $8,000 loan, and include penalties if need be, and restructure the repayment option. Most importantly, local governments and housing authorities should know that when repaid, the money stays with the locals as SHIP money that they may use according to standard procedure. This is a win/win for them. Also, the local government gets the standard 10% off the top for administration of this program. If you are getting push back from your local housing administrator at this point it is likely because they still don't quite understand the program themselves.
While we are anxious to get word of this program to our members, one problem that may be unavoidable is that money may not be "out the door" until the first week of August. Given that the new fiscal year begins July 1st new monies (via doc stamps) must be collected before they can be distributed. Even though FHFC appealed to the Chief Financial Officer, they say there was no way to get around this technical issue. We know it'll take time to close on a house anyway so it is not too soon for our members to start talking about this program to potential buyers who qualify. In fact, SHIP administrators should be taking applications NOW for the advance on the tax credit. Some may even have unspent money as part of their SHIP program from last year that could be used until the new money is available.
Now, on to the federal downpayment assistance that is being offered. NAR has provided information on how FHA is going to allow buyers to "advance" the tax credit. FHA-approved lenders have received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront.
FHA-approved private lenders can develop these bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent. The loans cannot be used to cover the minimum 3.5 percent needed for a downpayment on an FHA loan except in the special circumstance I mentioned above where the state or local government is the loan originator and there is not a private lender involved.
Good resources for you are the "Homebuyer Center" on our website and NAR's dedicated page to the First Time Homebuyer Tax Credit. As more information becomes available, we will certainly send updates and include them in Earlybird.
I hope this is helpful and answers some of your questions as the program gets off to a slow start.
John M. Sebree
Vice President - Public Policy
Florida Association of REALTORS®
P.O. Box 1853
Tallahassee, FL 32302
850-224-1400 (Office)
This message sent to cityrentals305@gmail.com by news@miamidaderealtors.
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