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Friday, June 10, 2011

Hurry!!! First Time Home Buyer Grant Program in Johnson County, Kansas

The Johnson County, KS.  Housing Services First Time Homebuyer Program is designed to assist low-to-moderate income Johnson County residents or people who have been employed for at least two years in Johnson County with the purchase of a home.

The Program is made possible through a HOME grant which is awarded to Johnson County Housing Services by the United States Department of Housing and Urban Development.

The home grant can be used in ALL cities in Johnson County, including Gardner, Olathe, Overland Park, Lenexa, Shawnee, Mission, Prairie Village and Spring Hill.

Who qualifies as a first-time homebuyer?
There are four basic eligibility requirements to participate in the First Time Homebuyer's Program - An eligible homebuyer is one who:
  • Has never owned a house, or has not owned a house in the past three years;
  • Is a single parent who is unmarried or legally separated from a spouse and has one or more minor children for whom the individual has custody or joint custody, or is pregnant;
  • Is a displaced homemaker who is an adult who has not worked full-time for a full year in the labor force for a number of years, but has, during such years, worked primarily without remuneration to care for the home and family; and is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment;
  • Has an income less than the following income limits for household size:
These limits have been determined by HUD in accordance with 80% of the median income guidelines for the Kansas City Metropolitan area (MSA: Kansas City, MO-KS)
Household Size
Gross Annual Income
  • Intends to own and live in the newly purchased home for at least five (5) years (effective January 1, 2006). If the house is sold within the first five (5) years, the homebuyer will be responsible for repayment of the pro-rated balance of HOME funds (down payment assistance). The rate of forgiveness is 20% each year for five (5) years using a full calendar year;
  • Mandatory homeowner training which will include homeownership counseling sessions by a mortgage counselor (before and after purchase);
  • Uses the purchased home as his/her primary residence;
  • The homeowner must occupy the home within 30 days of loan closing;
  • Buyers must not have more than 30% liquid assets of total purchase price of home;
  • Must have a down payment that is equal to 1 percent of sales price or $500, which ever is greater;
  • Total House Payment (PITI) plus recurring debt cannot exceed 41% of gross income;
  • Only documented income will be used to determine the maximum purchase price of a home by a participant.
Johnson County Housing Services reserves the right not to provide funding to any applicant whose income, debt, credit, etc, do not meet our local requirements.

What are the program features?
Down payment and closing cost assistance not to exceed $5,000 in the form of a deferred loan will be provided on behalf of the qualified participant (the amount to be determined at Johnson County Housing Services' discretion). 

Under no circumstance will this deferred loan be subordinated for refinancing during the 5 year affordability period.
The home must be purchased in Johnson County.
The home must be inspected by Johnson County Housing Rehabilitation Specialist and pass Housing Quality Standards (This does not replace a mechanical, electrical, or termite inspection, but must be performed as part of the federal requirements under this program).
An environmental review is performed on the potential home to be purchased upon submission of the address to the Johnson County Housing Services office. If the home is found to be in a flood plain zone, the home will be determined ineligible and the applicant would not qualify to receive down payment assistance for this purchase.
For any home built before 1978, a lead-based paint report must be submitted to Johnson County Housing Services with the real estate sales contract. This report must reflect either that no lead-based paint was present at the time of the inspection or that lead-based paint was present but has been remediated and a clear lead test was received after the remediation took place.

Buyers of properties located within 2,500 feet of the Johnson County Executive Airport (the Airport Clear Zone) will be required to execute an affidavit acknowledging that they are aware of the proximity of the property to the airport.
Fixed Mortgage Rate (15 - 30 year term)
Interest rate cannot be more than 1 1/2 percent over FHA rate (Requirement for all lenders).
If the lender requires, participant must purchase Private Mortgage Insurance (PMI).
Purchase price must not exceed $204,250 the maximum limited established for Johnson County. These limits are subject to change according to HUD guidelines.

What properties are eligible and what can be covered with First Time Homebuyer's funds?
Eligible Property Purchase:
  • Single-Family Home (including 1-4 unit dwellings)
  • Condominium Units
  • Townhouses
  • Cooperative Unit
  • Manufactured House with Lot
What Can Be Covered with Downpayment:
  • Processing and Settlement Costs
  • Private Lender Original Fees
  • Credit Reports
  • Title Fees
  • Recording Fees
  • Appraisal Fees
  • Attorney Fees
  • Reduction of Principal Balance of Loan
What are the steps for completing the mortgage process?
Upon receipt of Certificate of Completion of homebuyer education and counseling, the participant may begin looking for a home.

Once a sales contract is executed, the participant will select a lender to process the loan application.  Participation in the Johnson County Housing Services Homebuyer Program is not a guarantee of mortgage approval.
The Housing Quality Standards (HQS) inspection performed on the property must pass inspection prior to a closing date being scheduled. A minimum of 14 business days in advance of a scheduled closing date all required documents must be in the possession of Johnson County Housing Services. Required documents include a Certificate of Completion of Homebuyer Education Course, credit bureau, loan application, pre-qualification letter, real estate sales contract, good faith estimate, and an appraisal report. Termite, electrical and mechanical inspections are highly recommended, but not mandatory. If these inspections are performed, a report of the results must be forwarded, along with the above documents, within the timeline indicated above. Once all required documents are received by Johnson County Housing Services, they will be forwarded to legal counsel for review and approval of release of funds.
Checks are not processed internally in the Johnson County Housing Services Office. Therefore, timelines have been established to accommodate the required amount of time necessary for external processing.

Participating Financial Institutions
For participating lenders, contact the Dowell Taggart Team. We have a list of lenders that have been approved.

Grant funds are limited. As soon as the money is gone, the grant will be stopped. 

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Blog post written by the Dowell Taggart Team of RE/MAX Premier Realty

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Dowell Taggart Team Kansas City Real Estate Network