Homebuyer Programs Overview

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The Missouri Housing Development Commission’s (MHDC) homebuyer programs are

designed to help

potential

first-time

homebuyers,

qualified

Veterans, or repeat buyers

save

money by offering

mortgage financing with

low interest rates, and tax credits. For

homebuyers

with

limited

savings,

MHDC’s

programs provide the option for Down Payment

Assistance

(DPA)

to be used for down payment and closing

costs.

All MHDC loans are

provided by Certified Lenders for any eligible property in the State of Missouri. All interest

rates and allowable closing costs are set by

MHDC

with no minimum down payment or

minimum loan amounts.

MHDC offers potential

homebuyers with three (3) different programs, each offering

unique

ways to save money and make purchasing a home more accessible:

First Place

The First Place

program

is a federal program funded through tax-exempt mortgage revenue

bonds, targeting first-time homebuyers or qualified Veterans. The

program

governed by

IRS Tax Code Title 26 and

has

set purchase price and income limits. Interest rates are set

by MHDC, and are often lower than market rates. The program offers both a DPA and non-

DPA option.

Participation in the First Place Program may constitute as a CRA eligible activity.

Next Step

The Next Step program is designed for those potential homebuyers who may exceed the

income or purchase price limits of the First Place program. Homebuyers may

be first-time or

repeat buyers. This is a non-federal program where loans are pooled and sold as Mortgage

Backed Securities on the TBA market. All interest rates for the program fluctuate with

market trends

and

DPA is

available

option

as the market dictates. First-time homebuyers

may pair MCCs with the Next Step program.

Mortgage Credit Certificate

(MCC)

A Mortgage Credit Certificate enables a first-time homebuyer to claim a tax credit on their

federal

tax

return

for

portion

mortgage

interest

paid

during

tax

year,

effectively

reducing the first-time homebuyer’s cost of borrowing.

The MCC offers tax

credits at 25%,

35% or 45% or

up to a maximum of $2,000 and can be used as a standalone credit or paired

with the Next Step program.

Down Payment

Assistance

(DPA)

Not only can homebuyers*

receive lower rates, qualified homebuyers are eligible to receive

of the total

mortgage

amount

to help with

down payments and closing costs. The

DPA

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comes in the form of a

second

loan

that

will be forgiven if

the borrower stays in the home

and maintains the original

loan for

ten

(10)

years.

After year five, the second mortgage will

begin diminishing by 1/60 every month until year

ten

when it will be completely forgiven.

Non-Down Payment

Assistance

(Non-DPA)

Qualified homebuyers may opt

to use the First Place

or Next Step

Program without DPA

save

borrowers

money by

lowering

their initial interest rates. Typically, these loans

can be

.25% to .50% below the

rates offered with

DPA. Non-DPA

Loans are best for buyers who

have adequate funds to pay down payment and closing costs

but

are looking to save

money

with better rates.

Master Servicer

MHDC utilizes a Master Servicer for all of its loan products and all originating lenders must

sell

all loans to the designated Master

Servicer.

All loans are sold to the Master Servicer as

“servicing released” or non-recourse. Lenders are paid a Service Release Premium (SRP) for

each loan sold and rates and fees paid are guaranteed,

provided delivery takes place in the

reservation period.

The Certified Lender will accept the loan application, reserve the funds, and

process and

approve the loan. At closing, the lender will fund the loan and provide the 4% DPA (as

applicable). After closing, the lender will submit loan files to MHDC and the Master

Servicer.

Upon approval from both parties, the Master Servicer will pay the lender 100% of the

unpaid principal balance, plus the SRP. MHDC will reimburse the lender for all DPA as

applicable.

 First

Place

Program—

2% SRP

 Next Step Program—

1.5% SRP

Eligible Loans

 Initial purchase loans

 FHA, VA, or USDA-Rural Development

 FNMA HFA Preferred Conventional or Freddie Mac HFA Advantage Conventional

 30-year loans

 Refinanced mortgage loans are not eligible. Exceptions are construction-to-

permanent loans

and bridge loans with an initial term of less than 24 months.

Eligible Borrowers

Eligible borrowers must

meet credit score, debt-to-income ratio thresholds, and be within

eligible household income ranges.

Requirements vary by program.

Minimum eligibility

requirements include:

 First-time homebuyer, repeat buyer,

or qualified Veteran**

 Minimum credit score of

640 (subject to change)

 Debt-to-income ratio of 45% or less

 Debt-to-income ratios up to

50% or less for FHA and Government Sponsored Entities

(minimum credit score of 680 with these circumstances)

 The total gross annual household income must be within the established

limits (vary

by area)

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 Loans are subject to federal compliance requirements and may have minimum credit

scores greater than 640—lenders reserve the right to be more restrictive

Total gross annual household income is calculated using all sources of income for all

borrowers and qualifying household members living*, or intending to live in the home

including, but not limited to wages, overtime, bonuses, child support, alimony,

commissions; and earnings from a second job; business and investments.

*See Training Video library and program operations manuals for details

Eligible Properties

The purchase price of a home financed through the program cannot exceed the established

limits for Missouri properties. Eligible properties include:

 Homes within the purchase price limits (see website for details)

 Single-Family Detached

 Owner-Occupied Duplexes that are at least five years old

 Semi-Detached

 Condominiums

 Town Homes

 Doublewide mobile homes, modular or manufactured housing attached to a

permanent foundation

 Some restrictions apply to flood zones

Rates, Fees, and Requirements

 Interest rates may vary and are posted publicly to the MHDC website

 Interest rates are fixed for the life of the loan

 Homebuyer must occupy the home within 60 days of closing as a primary residence

 Loans made in this program may be subject to recapture tax provisions under federal

law

 No junk fees are allowed

 Lender’s may charge standard closing fees

Recapture Tax

The recapture tax generally applies if a borrower disposes of a residence within nine

years of the date of the closing of the loan or the date the borrower first assumed the loan

from the previous owner of the residence, whichever is earlier. The recapture tax is

limited to a maximum of 6.25% of the highest principal amount of the loan for which the

borrower was liable, or one-half of the gain realized from the sale or other disposition of

the residence, whichever is less.

What’s next?

Interested lender institutions and lending agents must follow a certification process to begin

selling MHDC loan products (information for onboarding can be found on the MHDC

website). Each loan officer or agency official who will sell MHDC loan products must become

certified through the lender onboarding process. This process includes

 Lender institution must be approved by the Master Servicer

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 Lending agents must watch a series of training videos and sign a certification of

completion

 Loan agents may attend a live question & answer session

 Each lending agent must complete a short certification quiz

 After completion of all certification steps, login credentials will be provided to each

certified lending agent

**Exceptions

and Notes:

In the First Place Program homebuyers do not have to be first-time buyers if they

purchase

homes

federally-targeted census tracks.

Consult

the MHDC website for

specific locations of

target

areas.

Generally,

loans originated in

target areas will receive

priority for

the lowest First Place Home Loan rate that has been offered

by MHDC

in the last

12 months.

Qualified

Veterans

do not

have to be first-time homebuyers.

A qualified

Veteran is any

Veteran who served active duty and who applies for financing within 25 years after leaving

active service.

First-time homebuyers

are defined as those persons who have not owned a home or had

an ownership interest in a primary residence for the past three years.