Sunday, May 29, 2011

KHC mortgage loans

New Kentucky Law = New Bucks For Buyers

How about a little more home sale re-stimulus?

Kentucky's new second-time homebuyer, and affordable mortgage, law was signed by Gov. Beshear today (Monday, March 28).

It's effective April 30.

Until now, many two-income families had incomes over the limit for Kentucky Housing Corporation (KHC) support. That disqualified them not just from more economical KHC mortgage loans, but also down payment and closing costs assistance. Down payment and closing aid has been available only through KHC.

Those home buyers will be eligible now in 33 days. There are lots of them.

It will make homeownership possible for many middle-income families. It also can be expected to end fence-sitting for many more.

The new law, HB 256, covers homeowners with incomes as high as 175% of the area median income. The program works through KHC, the state housing finance agency.

KHC's guidelines have not been redone yet, to turn that 175% into a dollar figure. The guidelines now on the KHC website do not apply to the HB 256 programs.

But expect the median income cap for Jefferson County to be $108,150. That's a household income limit. The current guidelines are much lower - $74,160 in Jefferson County for one to two people, and $86,250 for three or more people in the household.

Its not clear yet whether any adjustments to income will be allowed, such as counting Social Security Disability Income checks for a third person. Think in-law quarters for families taking care of parents. We'll keep you posted on that one (we've already put in the suggestion).

However, it is clear that the income limit counts the income of everybody in the household, whether they are going on the loan or not. That may mean decisions about the number of household members may turn into a timing issue. Some will buy the house singly or as a couple, and move a parent in later, possibly.

Down payment assistance and closing cost assistance can be set up 4 different ways. One plan lets home buyers repay monthly. Three plans are forgivable loans, depending on household type. The three basic categories are (1) single or 2-parent households, (2) disabled and receiving disability, and (3) other households meeting income guidelines. The three forgivable plans provide up to $4,500, which is forgiven after the buyer stays in the home 5 years. No monthly payments are required. The amount forgiven goes down every month on a pro-rated basis if the borrower has to move in less than five years. That's been the basic program for a while.

KHC also will be able to refinance mortgages with affordable, fixed-interest rates for 15-year and 30-year terms and offer mortgages for second-time home buyers.

KHC loans are pre-qualified and financed through one of 105 lending partner banks and mortgage companies located in communities throughout the state. They also are serviced in Frankfort, KY, an added safety cushion for home buyers worried about having their loans sold to anonymous strangers. They know exactly where their payments go every month. The existing Mortgage Credit Certificate (MCC) we first reported in the May, 2009 news flash are still available.

For More:

2010 guidelines by county, which are significantly below the HB 256 amounts, can be found at

To compute a new county income limit outside Jefferson, take the 2010 1-2 persons number on the chart and multiply by 1.45. You'll be tolerably close for a rule of thumb, until the new guidelines arrive at the end of next month.

Fill out my form!