You want to purchase a home in the Norman, Moore or Oklahoma City metro area, but don't have enough for a down payment? The government wants to help.
If you are planning on purchasing a house as your primary residence, there are programs through which you can get FREE MONEY -- and that is no joke.
1) NCRC (Norman Community Reinvestment Council Program)
Update (July 5th, 2009): Norman grant program is currently accepting applications for home purchases closing as early as August 3rd, 2009. Click here to see my blog post about the 2010, $5,000, Norman Grant!
Through the NCRC Grant program, you could receive up to $5,000 per household to help offset the cost of purchasing a home. To qualify, your income must be under the limits below:
Number of Family Members Income Limit 1 $32,750 2 $37,450 3 $42,100 4 $46,800 5 $50,550 6 $54,300
You must also:
- Be able to provide up to 1% of the purchase price of the house. For example, if you were to purchase a $100,000 house, estimated closing costs on an FHA loan would be approximately $6,500. All you would be required to bring to the table would be $1,000, the Grant would provide $5,000, and you could ask the seller to pay the rest!
- Must be able to qualify for a mortgage through a NCRC member bank
- Cannot presently own property or have owned property in the last 3 years
- Must occupy the home as principle residence for five years
- Must attend a homebuyer orientation class prior to closing. These classes are held once every other Saturday.
- Must be purchasing a home within the Norman city limits.
- House payment cannot be more than 41% of the primary borrower's income on a loan with a co-signer.
- Maximum Sales Price is $133,000
Example 1: Joe wants to purchase a $100,000 home and his income is below $30,150. He doesn't have enough to pay for all of the closing costs, so when he makes an offer on a house he asks the seller to pay $2,000 towards his closing costs, and applies for the NCRC grant. His closing costs will be approximately $6,500, of which he will have to pay $1,000, and the seller will pay $2,000. The grant will pay for the remaining $3,500 with the other $1,500 going directly to the principle of the loan!
Example 2: Joe and Janet have a daughter and want to purchase a $100,000 home, and both of their incomes total less than $38,800. They have saved up enough for all of the closing costs, but would like the money to help reduce their monthly payment, so the $5,000 goes directly towards the principle of their loan. At 6%, this saves them $300 / year!
Interested in this program? Just contact me at (405) 290-1345, or call Lisa Krieg with the City of Norman at (405) 366-5464
2) OHFA (Oklahoma Housing Finance Agency) Updated April 18th, 2009
Similar to the NCRC grant above, but with two distinct differences: they, not the bank set your mortgage rate, and through this program you have an option to either get a lower rate (Market best program), OR up to 3.5% to help with closing costs (1st gold program). The income limit for 1-2 person household is a little higher at $55,300, and for a 3 or more person household, $63,595. The APR that you will receive on loans through this program is set, so regardless of which bank you go through, your loan APR will be the same. To receive the 3.5% assistance money through this program, often times you will have a higher APR than if you were to get normal financing. Consult your mortgage lender to see what the best option is for your circumstance.
The new Bond Program starting April 28th, 2009 will offer 3.5% assistance at 5.83% APR for your loan. This tax credit it eligable to be used along with the $8,000 tax credit! Click the button at the bottom of this page to contact me for more information about this program, to get a list of eligable lenders for this program,
3) MCC (Mortgage Credit Certificate)
This is probably one of the more confusing of the assistance programs, and unlike the other assistance programs, which primarily focus on the initial cost of purchasing, this helps with the on-going expense. To enroll in this program, there is a significant application fee, but it nearly pays for itself in the first year, and continues to pay year-after-year. The federal government will actually give you a TAX CREDIT up to $2000 per year. A tax credit is different from a tax deduction, in that it allows you to subtract the full amount from what you owe to the IRS every year, whereas a tax deduction will only reduce your taxable income, and is based on the tax bracket you are in.
This tax credit is based on HALF of the interest that you pay on the first $40,000 of your mortgage. Multiply the first $40,000 of your mortgage by the interest rate that you have qualified for through your lending institution, and divide by 2, and there you have it -- the amount of the tax credit that you can receive per year. For example, if you have a $100,000 mortgage, your tax credit would be based off of the initial $40,000, and at an interest rate of 6.00%, that would give you a tax credit of $1,200 per year (40,000 x .06 = 2400, 2400 / 2 = 1200). This is $100 per payment! On a 30 year mortgage, you will not reduce the principle amount of your loan to less than $40,000 until year 23, so through this example, you would qualify for the full $1200 per year for 23 years (23 x $1,200 = $27,600).
To qualify for this program, your income must be within the following:
Targeted Area Non-Targeted Area Family of 2 or less $66,360 $55,300 Family of 3 or more $77,420 $63,595
- The house purchase price must be under $189,607
- You must live in the home as your primary residence
- Must not have owned a home for the past 3 years
As you can see, if you plan on living in the house for longer than 6 years and have enough to cover the closing costs and down payment required to make the initial purchase of a home, this may be a great option for you!
Caveat: If you sell the home within NINE years and make a profit and also have a substantial salary increase in the year you sell the home, you may have to repay some of the tax credit.
For more information about the Mortgage Credit Certificate, feel free to contact me or call the MCC Administration Corporation directly at (405) 364-6565.
If you are interested in purchasing a home, feel free to utilize my many resources that I have available on my web site, http://www.OklaHomeSeller.com, including the home search tool which will pull for-sale and sold home information directly from the Norman multi list, home purchasing walk-through to familiarize yourself with the home purchasing process, and much more!
"With me it's not about houses -- it's about homes"