MaineHousing's First Home Program helps Maine families realize the American dream of owning a home. MaineHousing is a non-profit, independent government agency who sells tax-exempt bonds to provide a continuous source of low interest rate funds to Maine lenders. As a result, lenders can make fixed rate mortgages to low and moderate income first-time homebuyers. Our First Home program provides eligible borrowers with a lower interest rate, generally below conventional rates. The lower rate can decrease a homebuyer's monthly payment by $60 to $100 depending on the amount financed.
Borrowers are required to obtain a loan guaranty or mortgage insurance when their down payment is less than 20% of the purchase price. Federal Housing Administration, Veterans Administration, Rural Development or various private mortgage insurance companies will insure loans in case of default and may be combined with a MaineHousing loan. Each insurer has their own down payment, source of funds, income, credit, and property requirements
MaineHousing does not make loans directly, but partners with a network of close to forty Maine lenders. These lenders take the loan application, process, underwrite, and close the loan on MaineHousing’s behalf. To apply for a MaineHousing loan, an applicant can contact a MaineHousing participating lender.
In addition to providing a lower interest rate, MaineHousing offers the following special program options:
- Maine Assist: Provides 3% of mortgage amount up to $4,000 for down payment and closing costs.
- Purchase Plus Improvement: Allows repairs to be financed at the same low (MaineHousing) rate.
- Mobile Home Self-Insured: Financing of mobile homes not older than 20 years located on leased land.
The definition of a first-time homebuyer is “someone who has not had an ownership interest in their principal residence in the past 3 years.” If an applicant owned a home previously, but not in the past three years, they would be considered a first-time homebuyer. Divorce situations can sometimes complicate the first-time homebuyer determination. Example: A husband and wife owned a home as joint tenants and the husband occupies the home after the divorce. The wife has moved from the home, but her name remains on the deed pending a property settlement. If she has not occupied the home for the previous three years, she would be considered a first-time homebuyer. Even though she has retained a title interest in the property, she has not had an ownership interest in her principal residence in the last three years.
If the mobile home is on leased land or in a park and the axles, wheels and hitch have not been removed and the mobile home has not been anchored to the site, the owner’s interest in the mobile home does not disqualify them under the first-time homebuyer requirement. Owners of an unattached mobile home on owned land would not qualify as a first-time homebuyer.
- New or existing, 1-unit homes
- Existing 2- to 4-unit homes
- Single- and double-wide mobile homes up to 20 years old on leased or owned land
- Existing 2- to 4-unit homes
- Condominiums
Homes financed through the First Home program may be subject to a Federal Recapture tax. The recapture tax affects only those homeowners 1) who sell or transfer their home within 9 years of the purchase date and 2) whose household income has increased rapidly and significantly and 3) whose property has increased significantly in value. If any one of these three is false, then no recapture is owed.
The First-Time Homebuyer program recapture tax provision is very different from the Rural Development (formerly Farmer’s Home) Direct Loan Program recapture requirements. It is suggested that buyers contact a tax advisor or the IRS for more information concerning any possible tax.
State housing agencies issue tax-exempt mortgage revenue bonds to fund the mortgages they make to first-time homebuyers at below-market interest rates. Federal law imposes income limitations and restrictions on the type and value of property that is eligible for tax-exempt mortgage financing. MaineHousing’s current Income and Purchase Price Limits.
Applicants for a Maine Assist loan must complete a hoMEworks 10-hour homebuyer education class. To obtain an up-to-date schedule of homebuyer education classes being offered statewide.
For MaineHousing options that require completion of homebuyer education class, the training must be completed before loan closing. However, it is strongly recommended that potential homebuyers complete homebuyer education training before they begin searching for a house or financing. Homebuyer education is recommended for every potential homebuyer even if they do not qualify for MaineHousing financing.
If the borrower brings all the necessary documents to the initial loan application, a MaineHousing loan should not take any longer to close than a regular loan.
No. The participating lenders originate and close First Home loans without prior review or approval from MaineHousing. Homeownership Division Officers are available to answer questions that the lender may have during the loan process.
MaineHousing usually establishes its fixed interest rate, effective as of the first of the month. Upon occasion, MaineHousing has changed the rate mid-month. The interest rate the applicant will receive is the rate in effect the date the loan registration is received by MaineHousing, not the application date. Once the loan closes, the rate is fixed for the entire term of the loan.
- Existing Properties - 90 days
- New Homes (including newly sited modular and mobile homes ) - 210 days
No. Once the applicant has a valid Purchase and Sales Agreement, MaineHousing will lock in the interest rate at no charge.
The lender must adhere to the lower of two limits when considering annual household income, the maximum mortgage loan amount, commercial use, and land value/size limits.
The loan guarantor or mortgage insurer establishes the down payment, acceptable source of funds to close, minimum credit requirements, debt ratios, and minimum property standards. Lenders require the borrower to obtain a loan guaranty or mortgage insurance when their down payment is less than 20% of the purchase price. Based on the borrower’s household income, liquid assets, property price, location, and veteran status, the lender determines which loan guaranty/mortgage insurance is best. FHA, VA, RD, or a private mortgage insurer provides a financial guarantee to eligible borrowers, protecting the lender and MaineHousing in case the borrower defaults on their loan.
The loan guarantor or mortgage insurer determines whether the minimum property requirements are satisfactory. As long as the maximum lot value/size and commercial use limits are met, MaineHousing accepts applicable FHA, VA, RD, and private mortgage insurance company property requirements. Mobile Homes must be not more than 20 years old.
MaineHousing can finance the total land of the residence if the appraised value of the total land is less than 30% of the overall appraised value. If the value of the total land of the residence exceeds 30%, the appraiser will be asked to determine a value for the portion of land, which exceeds one acre for a mobile home on a new site or new home, or the portion of land which exceeds 3 acres for existing homes, or the legal minimum lot size for the municipality. MaineHousing will rely on the appraiser’s determination of the excess land value. If the appraiser determines an excess land value other than zero, the borrower must pay at closing an amount in cash equal to the excess land value. Down payment paid by the borrower can be counted toward payment of the excess land.
Although MaineHousing does not require a home inspection, we highly recommend that homebuyers obtain one on the property they wish to purchase. The appraisal is done solely to estimate the property’s fair market value and does not provide information regarding hazards in or around the property or the life expectancy of major systems.
MaineHousing’s First Home Program requires only two additional documents at loan origination; the Borrower Affidavit and Seller Affidavit. In addition, the borrower is required to bring in three years signed Federal tax returns for each applicant. All other standard lender documents are used. The lender is required to complete an Income Eligibility Worksheet and Acquisition Cost Worksheet, but the borrower is not required to sign them.
Lenders have two extra calculations to make, the annual household eligibility income and MaineHousing’s property acquisition cost for our First Home Program. The lender must calculate liquid assets for MaineHousing’s Maine Assist Option. The lender must also review the appraisal to determine the land value is within 30% of the overall value and if applicable, determine if commercial use space is less than 10% of the residence.