Feeling bummed out that the $8,000 Tax Credit for First Time Home Buyers has ended? Well, there is some light at the end of the tunnel. R.I.P. USDA Loans (for now!) and Tax Credit. Hello Bond 77!
What Is Bond 77?
Bond 77 is providing $500 million in tax exempt mortgage revenue bonds and sponsored by the Texas Department of Housing and Community Affairs (TDHCA) looks to be a viable new source for first-time low and middle income homebuyers to secure financing on primary residences. It features below-market interest rates OR (not both) down payment assistance grants in the form of second mortgages.
How Does Bond 77 Work?
Basically, a first- time homebuyer will be able to select from either a ZERO-down loan, or a mortgage with below-market rates. The down payment is actually a loan of up to 5% towards the purchase price which can include some of the closing costs. It will typically be paid back upon the subsequent sale of the home. According to my source, most of the Bond 77 dollars will be seen in conjunction with FHA loans. Existing homebuyers, if they are buying in targeted areas and meet the income limits, are also eligible for this financing.
Bond 77 For Owner-Occupied Buyers Only
Bond 77 Financing is for owner occupied single family homes, agency approved condos and planned unit developments (PUDS). It is not available for investment properties, recreational, vacation or second homes. Homebuyers are subject to income limitations and are required to complete a very short, online, homebuyer education class, which is probably something all homebuyers should be required to to do.
Austin Homes That Qualify for Bond 77 Financing
This loan program is not going to work for all first time homebuyers in Austin and it does have associated costs. It’s not a silver bullet, but if you have a first-time buyer who is really strapped for cash, take the time to check this program out. It can even be an option for a non-first time homebuyer if they are looking in a targeted area.
