Homeownership Program


 2006

HACP reserves the right to change, alter or amend Homeownership
Program guidelines and, or Program benefits at HACP’s own discretion without notice.

Overview

•     Our mission is to provide a process for renters to become homeowners.

•     Basic concept – Instead of using HACP subsidy to help a family with rent, our homeownership
option allows a first-time homeowner to use HACP subsidy to meet monthly homeownership
mortgage payments and expenses.

 

•     A Section 8 tenant may choose to purchase the unit they currently reside in, however they are under no obligation to do.

.

•     The Homeownership option is available for both current HACP
public housing residents or Section 8 Housing Choice Voucher Program participants.

 

         Tenant Minimum Eligibility Requirements
 

         -City of Pittsburgh current HACP Public Housing or Section 8 tenants.

 

          -You must be living for (1) one year in either HACP public housing or receiving Section 8 Voucher assistance before

            you are eligible to receive Homeownership Program benefits.
 

         -First-time home buyer and the single-family home is located within the City of Pittsburgh
 

         -Minimum $17,000 year income and working full-time (30  hours week for (1) one year) or is a person with a disability or

          is a senior citizen

 

         - All HACP benefits are subject to budgetary constraints and limited funding.

 

 

 



 

Minimum Tenant Eligibility Requirements

 

    w Only current HACP public housing or Section 8 tenants

w First-time homeowner

w Property must be a City of Pittsburgh single family home and the
   participant’s only residence with no other ownership interest in another
   residential property


w A Section 8 tenant may choose to purchase the unit they currently reside in, they are under no obligation to do so


w Non-disabled families must have a minimum wage income of
   $17,000 year with full-time employment of not less than an average of
   30 hours a week

w Except for elderly and disabled families, welfare assistance may
   not be considered in determining if a family meets the income requirement

 

 

 

HACP Program Benefits to Buyer
HACP Pays For:

 

The maximum amount of financial assistance is $7,000 for homeowner’s insurance, home warranty, and closing costs assistance. This benefit is for both public housing and Section 8 buyers.

 

 

    ► Inspections include: Home, pest, survey, mold and radon
► Home mortgage appraisal, application and origination fees
► Real estate document processing, filing fees, mail delivery
     and notary stamps
► Flood insurance
► Pennsylvania State real estate transfer tax (buyer’s portion)
► Settlement company closing fees
► Three years property and casualty insurance policy
► Three years home warranty policy
► Six months foreclosure prevention fund
► Post-purchase counseling

 

Buyer Must Obtain Independent Property Inspection

 

 

Sales Agreement and Home Inspection:

 

        a.      The home must be inspected by an independent professional and selected by the buyer.  The
                 independent inspector must provide a copy of the inspection report to both the buyer and to HACP. 
                 HACP shall have discretion to disapprove the unit for assistance under the homeownership option.
        b.      A contingency clause must provide that the purchaser is not obligated to pay for any necessary
                 repairs cited as home deficiencies within the inspection report. 
        c.      The seller is required to pay for any necessary repairs as cited within the inspection report.

        d.      HACP will reimburse the buyer for the cost to obtain an independent property inspection.



Buyer’s Debt Ratio


 Affordability Standards

        a.     The PUBLIC HOUSING buyer’s debt ratio for homeownership expenses can not exceed 35% of their gross monthly income and SECTION 8
                buyers debt ratio can not exceed 35% of their gross monthly income.

        b.     The estimate of the sum of the buyer’s payments for mortgage principal and interest, insurance,
                real estate taxes, utilities, maintenance and other recurring homeownership costs will not exceed

                the sum of (PUBLIC HOUSING and SECTION 8 equals 35% ) of the applicant’s gross monthly income.

 

                Example: The buyer’s gross monthly income is $1,600 per month times 35% equals $560 is the maximum amount of

                money per month this buyer can afford to pay for mortgage principal and interest, insurance, taxes, utilities and maintenance.

 

 

 


 Seller’s Minimum Eligibility Requirement

         Sales Agreement and Seller Certification Form:  

HACP may not approve a home for sale if HACP has been informed by HUD that seller is debarred,

suspended, or subject to limited denial of participation.  HACP may deny approval of seller for any

reason stated above. HACP can provide the Seller Certification Form upon request.



 

Buyer’s Obligations
Tenant / Buyers Pay For Partial Closing Costs:

 

The maximum amount of financial assistance is $7,000 for homeowner’s insurance, home warranty, and closing costs assistance. This benefit is for both public housing and Section 8 buyers.

 

 

    ► Section 8 buyers must contribute a 1% down payment and public housing buyers must contribute 1% down payment.

► Prepaid city, county, and school taxes are paid by the buyer and at closing.

► The bank may require Private mortgage insurance (PMI) and if required PMI is paid by the buyer at closing.





Renters to Homeowners
6 Steps to Sales Agreement

Ÿ STEP 1:  Complete a homeownership class

Ÿ Public housing and Section 8 tenants must contact and enroll in a required 8 hour education class.

          Neighborhood Housing Services (NHS)
          710 5th Avenue
          412-281-9773 or 412-281-9774
          info@nhswpa.org

 

 

Ÿ  STEP 2:  Obtain a financial credit score

Ÿ  Neighborhood Housing Services (NHS) will obtain the tenant’s credit score and review the tenant’s finances. 

           Housing Counselor:  Fred Hodnett

           412-281-9775

           fhodnett@nhswpa.org

 

Ÿ  Before you can proceed to Step 3, a bank or mortgage lender requires a minimum tenant financial credit score range of 580 to 600+ or higher.

 

 

Ÿ  STEP 3:  Mortgage pre-approval letter
The lenders will provide eligible tenants with a mortgage pre-approval letter which will state a mortgage amount a lender is willing to loan a buyer. This letter must contain the buyer’s gross annual income that was provided to the lender for mortgage pre-approval.

Ÿ  STEP 4:   Fax (412) 456-5259 or mail your mortgage pre-approval letter to the HACP Homeownership Program.

                      Mailing Address:

                            HACP Homeownership Program

                            200 Ross Street, 6th Floor
                       Pittsburgh, PA 15219-2068
 

Ÿ  STEP 5:   Tenant shops to select and purchase their first home within the City of Pittsburgh.

 

Ÿ  STEP 6:   Tenant offers to purchase a home with a Board of Realtor’s sales agreement.

The buyer must hire an independent, professional home inspector to inspect the home the buyer would like to purchase.
The buyer’s sales agreement must state that the buyer has the option to terminate the sales agreement based upon property deficiencies that are identified within the independent inspection report.

 

 

 

 

Lump-Sum Mortgage Assistance

 

    HACP offers lump-sum mortgage assistance payment benefits for public housing residents.

 

Ÿ    HACP Lump-sum payment is held as a 2nd mortgage, Interest free, and reduced over a ten-year term.

Ÿ    Lump-sum payment can not exceed a maximum of $20,000.
Note: It is possible for buyer to receive less than $20,000. There is no guarantee that the buyer

will receive a lump-sum payment.

 

Example:  The sales price of the home is $50,000

Buyer’s lump-sum payment is $15,000 (this amount varies and it is based upon Program eligible buyer’s income and family composition)

Therefore, $50,000 sales price less $15,000 lump-sum payment equals $35,000 first mortgage.

 

Which means that the buyer must make payments to the bank based upon a $35,000 first mortgage.

   

 

 

 

 

 

 

Lump-Sum Calculation

Ÿ Example

     $65,000 sales price of home

    HACP maximum lump-sum payment is $20,000

 

    Buyer’s total eligible lump-sum assistance = $20,000

    Therefore,

     $65,000 sales price
     less $20,000 HACP lump-sum payment (2nd mortgage)
     = $45,000 buyer’s 1st mortgage (which is the amount the buyer borrows from the bank)


 

Summary

 

The maximum amount of financial assistance is $7,000 for homeowner’s insurance, home warranty, and closing costs assistance. This benefit is for both public housing and Section 8 buyers.

 

«Closing costs paid on behalf of buyer

«Three years paid homeowner’s insurance and home warranty policies

«Six months foreclosure prevention fund

«Post-purchase counseling

«Education and credit counseling in place

«Banking services in place

«Closing and settlement services company in place

«HACP scattered sites homes for sale

«Proven process – tenants are homeowners