Jul 19 2011

Next Home down payment assistance program coming maybe

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There’s a new Indiana housing program in the works, and I hope it’s available soon!

Called Next Home, this program is slated to be for first-time homebuyers AND previous homebuyers. Further, the income ceiling is higher, so more folks should be able to qualify.

The terms right now:

·         Down payment assistance to non first time home buyers
·         DPA is 4%
·         FHA loans
·         Higher income limits than that of First Home/Plus
·         Can be used  with MCC but then all MCC requirements come into play, first time buyer etc.
·         DPA is fully forgiven after 2 years (!!!!!!!)
·         DPA is zero interest no monthly payments
·         Min credit score 650
·         No purchase price limits
·         Must be originated through a participating lender

If you qualify for the Mortgage Credit Certificate as well, you can do both programs. That’s like stacking coupons! The MCC is a program that gives you 20% of your mortgage interest paid each year. You get it back as a tax credit. Better than a tax deduction.

If you’re buying a house in Indiana in the near future, do check out these programs on the Indiana housing web site. Note that there are small fees involved for getting either program. A few hundred bucks or less.

And if you live in another state, by all means seek out the same types of programs for your area.

I do think we qualify for both programs, and if so, that would make our effective interest rate less than what we could get if we got a conventional 15-year loan.

I’m going to keep my eye out for when this program comes about. I hope it happens before we find a house, because that’s a lot of money on the table.

EDITED TO ADD:

I spoke with a lender who has more familiarity with the program, and she said this will have a much higher interest rate. She said she expected it to be 5.25%. Yuck! She also said you’d have to pay PMI for 5 years. That would basically negate any benefit for me since we should be able to get a conventional loan at a much lower rate and we probably won’t have to pay PMI. But it’s good to know our options, anyway!


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Hey! I'm Kacie, wife and mother of 3. I write about my family's finance: how we save money, improve our spending, and plan for the future.

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