A1.

MaineHousing programs help 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 as well as veterans and active duty military personnel. Our programs provide eligible borrowers with a lower interest rate, generally one to two points 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, and Rural Development will guarantee/insure loans in case of default and may be combined with a MaineHousing loan. Each guarantor/insurer has their own down payment, source of funds, income, credit, and property requirements.

A2.

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. For a list of participating lenders, visit www.mainehousing.org or call 1-800-452-4668.

A3.

• Low, fixed interest rates..
• Down payment and closing cost assistance
• Include home repairs and energy improvements in mortgage loan amount: Purchase Plus Improvement option provides up to $35,000 for eligible improvements.
• Payment protection for unemployment: Maine HOPE – Homeownership Protection for Unemployment – can help eligible borrowers by making four MaineHousing mortgage payments.

A4.

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.

The following example clarifies the first-time homebuyer definition as it pertains to divorce situations. 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.

The first-time homebuyer restriction does not apply to the following:

• Persons who have owned unattached mobile homes on leased land (see Q5 below)
• Veterans and active-duty military who are eligible under the Operation New Home program (see Q6 below)

A5.

If the mobile home is located 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.

A6.

There is no first-time homebuyer restriction for veterans and active-duty military personnel.  If an applicant has owned a home in the past three years and meets the following eligibility criteria, they may be eligible for a MaineHousing mortgage under the Operation New Home program. 

• Served on active duty for 180 days or more or within a war zone
• Remain on active duty or have been honorably discharged
• Have never received a mortgage financed with mortgage revenue bonds
• Meet all other MaineHousing requirements

A7.

• 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
• Condominiums

A8.

Discount points lower the borrower’s interest rate on a MaineHousing loan.  MaineHousing offers 0 point or 2 point options.  If the borrower chooses the 2 point option, the seller, borrower or a third-party can pay the points. 

A9.

MaineHousing borrowers 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) who realize a gain from the sale.  If any one of these three is false, then no recapture is owed. 

Most borrowers will not have to pay any recapture tax.  For others, the amount will be minimal.  The maximum tax is 6.25% of the original loan amount or 50% of the gain on the sale whichever is less.  Gain is calculated after items such as realtor, legal and closing fees have been deducted from the proceeds of the sale. It is suggested that buyers contact a tax advisor or the IRS for more information concerning any possible tax.

A10.

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 may be found at www.mainehousing.org.

A11.

Applicants receiving down payment or closing cost assistance must complete a hoMEworks 10-hour homebuyer education class.  To obtain an up-to-date schedule of homebuyer education classes being offered statewide, please visit www.mainehomeworks.org

A12.

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.

A13.

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.  On average, MaineHousing loans close within 40 days. 

A14.

The participating lenders originate and close loans without prior review or approval from MaineHousing. 

A15.

A16.

• Existing Properties: 90 days
• New Homes (including newly sited modular and mobile homes): 210 days

A17.

No.  Once the applicant has a valid Purchase and Sales Agreement and the loan has been reserved, MaineHousing locks in the interest rate at no charge.

A18.

The lender must adhere to the lower of the two limits when considering annual household income, the maximum mortgage loan amount, commercial use, and land value/size limits.

A19.

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 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/ insurance is best.  FHA, VA, or RD provides a financial guarantee to eligible borrowers, protecting the lender and MaineHousing in case the borrower defaults on their loan. 

A20.

ManeHousing offers financing for eligible mobile homes under the First Home and Operation New Home programs.  The mortgage insurance options available vary according to the mobile home type, location, and the borrower’s down payment (and resulting loan-to-value).

A21.

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, and RD property requirements. Mobile Homes must be not more than 20 years old.

A22.

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.

A23.

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.

A24.

MaineHousing requires only two additional documents at loan origination; the Borrower Affidavit and Seller Affidavit.  In addition, all title holders must supply three years signed Federal tax returns.  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.

A25.