Why Bond Money?

No credit score minimum, helps pay down payment, low interest rate,

down payment assistance and closing cost assistance!

 

 

Millions of families have found home ownership more affordable through the use of Mortgage Revenue Bonds also known as Bond Money. The IRS allows state and local governments to sell tax-exempt bonds and use the proceeds to finance low-interest rate mortgages for homebuyers. 

 

Bond Money has made homeownership possible for more than 2.4 million families, more than 100,000 every year. A typical bond mortgage saves as much as $100 a month compared to a traditional mortgage. That’s nearly a $40,000 savings over the life of the mortgage.  Bond programs may also provide down payment and closing cost assistance.

 

There are two Alabama Housing Finance Authority (AHFA) Bond Money programs: STEP UP and FIRST STEP.

 

 

Step Up Program

Step Up is a homeownership program designed specifically for moderate-income home buyers that can sustain a market-rate mortgage, but need help with the down payment. AHFA offers down payment assistance with no sales price limits and higher income limits than the First Step program.

In addition, AHFA offers a 30-year, fixed-rate first mortgage with an interest rate slightly higher than current market rate. The down payment funds are secured by a 20-year second mortgage. The loans are blended together, so homeowners have only one check to write each month. Participants must complete a homebuyer education course to qualify.

 

First Step Program


The First Step Mortgage Revenue Bond Program (First Step) is funded by the sale of tax-exempt mortgage revenue bonds by the Alabama Housing Finance Authority (AHFA). The revenue is used to purchase mortgages from AHFA’s participating lenders, providing them with the funds to loan home buyers.

AHFA provides entry cost assistance in conjunction with the First Step program since down payments are typically the greatest barrier to homeownership. AHFA combines low-interest loan funds with 30-year, FHA, VA, Rural Development or conventional mortgages. Program participants must complete a homebuyer education course to qualify.

 

Income Limit                                                      

Depending on household size and the location of the desired property, the income limits range in between $54,900 and $76,860.

 

Sales Price Limits

These limits are set by the IRS, are for both new and existing homes and are currently between $289,705 and $237,031.

 

First Step FAQs

What is a target area?
Target areas are set by the U.S. Census Bureau to encourage economic growth. To find out if your desired property is located within a target area, please contact HomeTown Mortgage Services.

 

I am not a first-time home buyer. Can I possibly qualify for a First Step loan?
Yes, you may qualify for a First Step loan even though you are not a first-time home buyer, but only if your desired property is located within a target area.


May I later obtain an equity line of credit or second mortgage on my First Step home?
Junior mortgages are not permitted under the First Step program except for second mortgages made under AHFA's Down Payment Assistance program or other programs approved by AHFA.


Will the First Step program finance a newly constructed or under construction home?
Yes, you may use a First Step loan on a new home, a home still under construction, or an existing home. No refinancing of any outstanding indebtedness is permitted except for take-out/construction loans that do not exceed a 24-month term.

 

What is recapture tax? How does it affect me?    
Recapture tax requires some mortgagors to repay the federal government a portion of their gain at time of sale of the home if they financed their home with a First Step loan. Most borrowers will not pay any recapture tax. For others, the amount will be minimal. The tax will never exceed 1/2 of the gain on the sale of the home, or 6.25% of the original mortgage, whichever is less. To owe any recapture tax at all, you must sell your home within nine years, earn significantly more income than when you bought the home, and gain from the sale. All three of these criteria must be met.

 

FIRST STEP BOND Program Outline:

 

(1) FHA loans below market rate at 5.875%

(2) Down payment assistance available for up to $7500 or 3% of sales price whichever is less

(3) If income is $41,360 or less for the household down payment assistance is paid back at 0% interest over a 20 year term.  For income over this amount the loan is paid back at the same rate as first.

(4) Commitment fee required within 72 hours of reservation .5% of loan amount for 30 day locks and 1% for 90 day locks

(5) Sales price limits: Target = $271,050 (FHA limit) Non Target = $237,031

(6)Household income limit: Target = $77,400 Non Target 1-2 in family $64,500 Non Target 3+ in family = $74,175

(7)Money is reserved on first come first serve basis.

(8)This is a great way to still get you in a home with no down payment!!!

 

$7,500 tax credit for first time home buyers

Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase through June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).