MMP: Montgomery Homeownership - Phase III: OUT OF FUNDS
The Maryland Mortgage Program announced on October 12th, 2018 that they will bring back the “Montgomery Homeownership Program” to help first time home buyers with down payment assistance for purchases in Montgomery County, Maryland.
The program classifies a “first time home buyer” as someone who has not owned a property in the past three years. There are some exceptions to that rule, so still feel free to inquire about the program and we will see if your specific situation is allowed. There are a few other requirements with this program including a 640 minimum credit score and maximum income limits by county.
As of October 12th, the household income limits are:
Households of 1-2 members: $140,640.00
Households of 3 or more members: $164,080.00
The Montgomery Homeownership Program is offering eligible buyers 40% of their annual household income up to $25,000 as a zero percent deferred down payment assistance loan. This means that money has to be repaid to the program when you sell or refinance, but there is no interest on the money. Through the program, when using a conventional loan, the homebuyer also gets reduced mortgage insurance coverage which leads to extra savings on a monthly basis.
Let’s look at an example.
Jane Homebuyer is purchasing a single family home in Maryland for $300,000. She has $10,000 in savings to use towards this home purchase and makes $60,000 per year.
Option 1: She can use a standard, 3% down conventional loan and negotiate for the sellers to cover her closing costs. This means, she needs $9,000 out of pocket. Her monthly mortgage payment for this option is roughly $1,970.
Option 2: She can instead use the Montgomery Homeownership Program to get 40% of her income towards her down payment, which is $24,000. She can still ask that the sellers cover her closing costs. With the extra down payment assistance, she can now make a 10% down payment and with the assistance through the program, she now only needs to come out of pocket $6,000 instead of $9,000. With the larger down payment, this also means her mortgage payment will be cheaper. Her estimated payment now comes to $1,865/mo.
With the money Jane is getting through the program, she is paying $3,000 LESS cash out of pocket on this purchase, and saving $105 EACH MONTH.
This is just one example! Through this program you also may be able to structure your mortgage so that you can get into a home without any cash out pocket.
Interested in learning more?
Click on the “purchase” link here to get started: https://hcochin.gofirsthome.com/. We’ll then go over your options specific to your personal finances and your goals with this home purchase.