Tell the Government to Pay Your Home Loan Closing Costs!
I will over-state the obvious and tell you it’s a buyer’s market for real estate. Great news if you’re a buyer. Even better news? The government wants to help you pay the costs to buy a home.
That’s right, welcome home. It’s more than just a door mat saying. That’s the name of the government program that will help pay your closing costs to buy a home if you meet the following criteria:
1. You do not currently own a home.
2. Your household income is at or less than 80% of the average income for the area where you are looking to buy a home.
So it’s not clear who qualifies because you could very well qualify in one area but not another. If you are looking to buy a home in Hamilton County, Ohio (which is essentially Cincinnati), you would qualify for the 2nd requirement listed above if your household income was at or less than $52,960 for a household of one or two people. That maximum amount of income allowed to qualify for the program is increased to $60,904 for a household with 3 or more people.
In more rural areas, such as Adams County, Ohio (some 3 counties east of Cincinnati and Hamilton County) a couple making $56,640 or less would qualify and a family of 3 or more people would qualify with $66,080 or less in income.
You can see the maximum income amounts allowed by the program as they pertain to all 88 counties in Ohio by visiting the Federal Home Loan Bank of Cincinnati’s website.
If you meet the above requirements, the government (a.k.a. The Federal Home Loan Bank) will let you have up to $5,000 of downpayment assistance. It’s yours for the taking, first come, first serve! It must be used for a home that you occupy, so no rental properties.
The only catch is that if you sell the property within 5 years of taking this downpayment assistance, you will have to repay it to the government on a pro rated basis. For instance, if you sell the home after two years and had received $5,000 of assistance, you would have to repay $3,000. The loan from the government becomes a gift to you at the rate of $1,000 per year. After 5 years, the government says congratulations! You will need to discuss any tax implications of taking this assistance with a tax professional.
This is a grant program, and like most grant programs there isn’t an endless supply of free money to go around… so this is not like the free money that the government is sending out to tax payers as part of the economic stimulus that Congress passed. Once the money for this grant has been dispursed, that’s it… no more money. So if you are thinking of buying and meet the eligibility guidelines above, tell your Realtor and/or Loan Officer to get you into this program right away!
I, unfortunately, cannot take credit for discovering this good news. I found an article about this grant/down payment assistance program in my May 2008 Ohio Realtor newsletter. Therefore, I also cannot accept blame or responsibility for any errors or omissions in this article. I would encourage anyone that is interested in the program or has questions about it to visit the Federal Home Loan Bank of Cincinnati’s website or talk to your mortgage loan officer. That is my disclaimer! I’m just sharing news that I found in my trade publication.
As always, I welcome your comments and feedback…