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IHFA’s Down Payment Assistance Tax Credit Advance

The American Recovery and Reinvestment Act of 2009 provided a federal income tax credit for first-time homebuyers of 10% of the sales price, up to a maximum of $8,000. This tax credit is available to qualified home buyers who purchase a home by December 1, 2009. In order to help buyers monetize this tax credit for down payment and closing costs when they purchase a home, Idaho Housing and Finance Association (IHFA), through its IdaMortgage lending program, is offering a special short-term Tax Credit 2nd Loan to qualified buyers.

In conjunction with an IdaMortgage loan, a subordinate loan will be offered to qualified first time homebuyers in the amount not to exceed 5% of the sales price or $7,000. A fee will be charged of $250 with $150 refunded upon repayment of the loan on or before the loan due date. The loan will accrue interest at 3.0% with a due date of July 1, 2010. The Tax Credit 2nd Loan is expected to be paid off from the borrower’s tax refund obtained through the application of the federal tax credit. If the homebuyer defaults on the loan and cannot repay at that time, IHFA has the option of pursuing foreclosure as described in the deed of trust, or modify the loan to amortize over the remaining term of the first mortgage loan at an interest rate of 3% higher than the first mortgage rate.

Borrower qualifications are:
1) Must be a first time homebuyer,
2) Must have a FICO score of no less than 640, and a total debt ratio of no more than 45%,
3) Homebuyer qualifies for an IdaMortgage loan.

Also, we continue to offer IdaMortgage’s Good Credit Rewards program that helps qualifying borrowers purchase their home. This 2nd mortgage program is available for down payment and closing costs.

Here is a list of Good Credit Reward Qualifications:
Homebuyers with less than 140% of area median income can now qualify for IdaMortgage's 30-year fixed rate down payment and closing costs assistance second mortgage program. The down payment assistance loan must be combined with an IdaMortgage product. The second mortgage will be offered at 1 to 2% above IdaMortgage's standard interest rate.
The Good Credit Rewards down payment and closing cost assistance second mortgage interest rates are tiered by credit score:
· Interest rate is 1% higher than mortgage rate of the first mortgage for borrowers with credit scores of 720 or higher.
· Interest rate is 2% higher than mortgage rate of the first mortgage rate for borrowers with credit scores of 700 to 719.
· Maximum amount of second mortgage is capped at 3.5% for all loan programs, not to exceed 100% combined loan-to-value, or the maximum approved by mortgage insurance guidelines.
· Homebuyer education is required for buyers with credit scores lower than 720.
· Borrowers with credit scores of lower than 700 will not be able to obtain this second mortgage.
· Borrowers must contribute at least $500 towards the transaction, or higher depending on Mortgage Insurance requirements.
· Good Credit Rewards funds are based on need. Borrowers cannot have more than an equivalent of three month’s payments in liquid assets after closing.

Click here to view IdaMortgage loan products and rates.
Click here to view information on the Housing Stimulus Bill (Look under the Breaking News Section)