Down Payment Assistance

Downpayment assistance programs make home buying easier for low to middle income, first-time home buyers. The following program summary applies to buyers in the city of Tacoma. If you would like more information about downpayment assistance programs in your city, please contact me and I will send you the information.

PROGRAM SUMMARY

The maximum loan amount is 6% of the selling price and the required borrower participation can't be less than $500. The Down Payment Assistance loan can be used to pay for down payment, closing costs, and buying down the interest rate.
Borrower qualifying ratios:
Homebuyer's gross annual household income cannot exceed 80% of the median income for Tacoma
The mortgage payment ratio cannot exceed 40% of the household's gross monthly income
Total monthly payments (including credit accounts) to income ratio shall not exceed 50%.
The Affordability Index shall not exceed "one" ~ as determined by the mortgage payment (Principle, Interest, Taxes, Insurance)/40% of the household's gross monthly income
The TCRA must be in a second position on title, an exception is made for Section 8 home purchase assistance or Housing Finance Commission "Home Choice" funding
Primary loan must be a fixed rate for the first two years of the loan; no adjustable rates for the first two years.
The homebuyer must be a "first-time homebuyer", not have owned a home for three or more years. -Exceptions to this policy include displaced homemakers and single parents who resided in a home owned by their spouse. Household cannot own any other home and borrowers must attend a homebuyer's class (certificate of completion required).
This is an excellent opportunity for homebuyers who don't have the down payment necessary to purchase a home, but can afford to make monthly mortgage payments.
Call Reggie Brown at Pierce Commercial Bank for additonal details. His number is (253) 202-5025.
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Down Payment Assistance Program Details and Guidelines

Property Qualification:
The property being purchased must be a single-family residential dwelling or Condominium.
During the period the property is offered for sale and at the time of sale, the dwelling must be vacant, occupied by the applicant or occupied by the seller. In no case shall the dwelling be occupied by a tenant who would be displaced by the sale. This requirement must be confirmed in writing by the seller of the property prior to receipt of the down payment assistance.
The property must be located within the boundaries as indicated on the map, within the city limits of Tacoma.
An inspection will be made by City staff to ensure the property meets minimum Housing Quality Standards (only necessary if HOME funds are the funding source). If the home was constructed prior to 1978, a visual paint assessment will be included. The presence of peeling, chipped, chalking or cracked paint must be corrected or a report from an EPA-certified inspector be provided showing no lead-based paint hazards exist on the property.
Borrower Qualification:
The applicant must be a first-time homebuyer, which is defined as not having owned a home during the three-year period prior to the purchase under this program. A displaced homemaker or a single parent may not be excluded from consideration as a first-time homebuyer on the basis that the individual, while married, owned a home with their spouse or resided in a home owned by the spouse. The household cannot own nor have an interest in any other real estate at the time of purchase. Co-signers who will not live in the home are not allowed.
Borrower must provide minimum down payment contribution of $500.00.
The applicant must have signed and entered into an “Earnest Money Agreement” or a “Purchase and Sale Agreement” with the seller of the property.
The income level of the applicant (all household members over 18 years of age) must be no greater than 80% of the median income established by HUD for the Tacoma area.
The applicant agrees to occupy the home as his/her primary residence for the life of the loan. Failure to do so will result in the acceleration of the note and the outstanding loan balance will be called due.
The borrowers must have completed a homebuyer’s class and have received a certificate of completion from such.
The front end Debt-to-Income ratio cannot be greater than 40% (PITI divided by monthly gross income). Considerations may be made for higher ratios and approved on a case by case basis.
The Loan-to-Value is not to exceed 110%. An exception will allow 120% Loan-to Value for the Hilltop (Census Tracts, 612, 613, 614, and 617) and the Eastside (Census Tracts 620, 621, 622, 623, and 633) areas.
Procedure:
The borrower is pre-qualified by a Bank/lender of their choice.
The borrower selects a home consistent with the pre-qualified loan amount and enters into an “Earnest Money Agreement” or “Purchase and Sales Agreement, subject to accepted financing, with the seller.
The lender processes the loan and prepares a “Good Faith Estimate”, showing the amount the borrowers are required to bring to closing.
The lender or realtor then provides the City of Tacoma, Housing Loan Specialist with copies of the following information:
Original cover letter (on Lender’s letterhead) requesting funds. See attached sample. Underwriter’s preliminary approval. Good Faith Estimate. Earnest Money Agreement or Purchase and Sales Agreement Loan Application with borrower(s) current information. Credit Report and letter of explanation on any derogatory ratings. Title report. Verification of Employment and/or income. Alternate documents are acceptable; tax returns are not required. Appraisal (include at least first two pages, comment pages and photos. Certificate of completion of homebuyer’s class.
City staff will inspect the property to ensure it complies with Housing Quality Standards (only necessary if HOME funds are the funding source). If the home was build prior to 1978, a visual inspection will be made for lead paint hazards. Peeling, chipped, chalking or cracked paint will require repair and re-inspection of the property.
The complete package will be reviewed and a recommendation will be submitted to the Housing Supervisor and then to the TCRA (Tacoma Community Redevelopment Authority) Administrator for approval. Upon final approval, a letter of commitment is forwarded to the lender and borrower. Commitment can be given subject to receipt of the appraisal, title report and the certification of completion of the homebuyer’s class, if these items are pending.
Prior to a check being issued, a copy of the insurance binder listing the ‘Tacoma Community Redevelopment Authority” as a loss payee must be presented. This can be faxed or brought to our office at 747 Market Street Tacoma, WA 98402 Suite 1036.
After all the conditions are met and the closing date is confirmed, TCRA will prepare the loan documents for the Down Payment Assistance (DPA) Loan and forward those, with the closing funds, to the escrow office for a simultaneous closing. Please note that five (5) business days are necessary between the time the completed package is approved and the date of closing, in order to assure funds are available. Checks are written on Tuesday and Thursday only.
Loan Terms:
Depending on the source of funds, the assistance may be in the form of a 20 year deferred, 0% interest loan; or may be a five-year deferred loan with no payments, then have small monthly payments of approximately $50 per month beginning in the sixth year of the loan with a balloon payment for any remaining balance in the 20th year.
If deferred, the deferment will be in effect until the sale, refinance, transfer, failure of borrower to occupy as principal place of residence, or non-compliance with the loan agreement. Sale or transfer includes actual or attempted sale by contract, assignment, lease, rental or other conveyance of the property to a person other than the borrower, whether by gift or value. This also includes any further voluntary or involuntary encumbrance of the property by the borrower, except an encumbrance by a government agency in the form of an assessment for streets, sidewalks, lighting or sewer, so long as the borrower pays such assessments when due. A surviving borrower, upon the death of another co-borrower, can assume the loan.
Misc. costs and restrictions:
Depending on the source of funds, the borrower’s minimum down payment contribution may be $500.00. Interest rate cap of no more than 3% over current FHA rates (at par). Fees from the Good Faith Estimate payable in connection with loan; i.e. lender/broker fees, processing fees, administrative fees and underwriting fees, combined cannot exceed 3% of purchase price. Normal Loan costs are not included in this 3% max. The interest rate must be fixed for the 2 years of the loan. This excludes ‘Interest Only’, ‘6 Month Libor’ and 1 Year ARMs for DPA consideration.
City staff will conduct random inspections of the property. Should the property fail to meet minimum standards, a notice of failure to comply will be issued providing 30 days for correction. A second failure to comply will result in the outstanding balance of the loan being declared in default and immediately due and payable.
The loan is secured with a Promissory Note and Deed of Trust placed in second position that will be signed with the primary lender’s loan closing. A third lien position is allowed for the Housing Authority Section 8 homebuyer plans only. This includes purchase plans for persons with disabilities.
For more information, Contact Me.
Best Regards,
David J EdwardsReal Estate Agent & REALTORThe David J Edwards TeamKeller Williams Realty Southeast SoundPhone: 425-890-8045Fax: 425-902-1899E-Mail: david@davidjedwards.comWebsite: http://www.davidjedwards.comBlogsite: http://www.davidjedwards.com/real-estate-blog.aspMobile Site: http://davidjedwards.mofuse.mobiCommunity Reports: http://www.topmarketer.net/CSR/CSReport.aspx?CV4GU5KAYOEFView This Week’s Market Conditions Around Your Home: http://www.homeinsight.com/Widget/default.asp?BFBMVVHW4HZT The David J Edwards Team specializes in Residential Real Estate for buyers and sellers.