Austin First Time Home Buyer Downpayment Assistance

The Bond 77 First Time Home Buyer program exists to help Austin home buyers bridge the gap with down payment assistance. There are a set of qualifications for properties that meet this criteria and for the home buyer. (Homes that qualify for First Time Homebuyer Down Payment Assistance Bond 77 in Texas.) The Bond 77 program is provided by the Texas Department of Housing & Community Affairs.  Its budget of $500 million is available to low and middle income first time home buyers in Texas on a first-come, first-served basis.  This means as applications are received, funds are set aside.  It can be used with many loan programs, FHA, Conventional, USDA, and VA; and on residential single family homes or approved condos up to approximately $258,690 in cost for non-targeted areas.  This is a great program for first time home buyers in Austin and the entire state of Texas.

There are 2 different programs here:  Assisted and Unassisted.

• Assisted : a second, silent lien of 5% of the mortgage amount to help with down payment and closing costs. This second lien is interest-free, and will have to be paid back after the 30 year mortgage closes.  Interest rates are a bit above market rates, or about 5.74% interest rate approximately.
• Unassisted: no second lien, but the interest rate will be a bit below market rates, or 4.99% approximately

Who can use the program?

• First time home buyers who occupy the property, it does not matter who else is on the loan, as long as the occupant is a first time home buyer and is on the deed
• Current home owners who purchase in a “targeted” area (see below)
• Meets income requirements (see below)
• Completes a certified Home Buyer Education course prior to underwriting, costs is about $400-$500 and can be completed online

“Targeted” area = low income areas, Travis county only has a handful of these areas: Census tracts 000604, 000802, 000804, 001000, 002311, 002316, check the status of your area here

All properties below $316,000 qualify for the Bond 77 Program in Austin. See a list of Homes that qualify for downpayment assistance via Bond 77.

Income requirements:

• Sum of all persons’ income (all sources) either living in the property or on the Deed
• Targeted area, 1-2 persons = $87,960 max
• Non-targeted areas, 1-2 persons = $73,300 max

Why use the program?

• I have a down payment, but I would like below market interest rates
• I need down payment or closing cost assistance

Restriction: Recapture tax!

If the property is sold within 9 years of the mortgage closing and they profit on the sale, the borrowers will have to pay the lesser of these two amounts:

• 50% of the net gain on the sale, OR
• 6.25% of the original mortgage amount

Example: If you purchase the property and close the mortgage for $130,000, and then sell the property 6 years later using a Realtor for $145,000 (considering 9% approximate fees for closing and commissions), you will net $1950 in profit.  Your Recapture Tax would be $975.  Disclaimer: this is only an example, and numbers would have to be confirmed by a lender.

Contact the Goodlife Team if you would like more information (phone 512-892-9473), or are interested in taking advantage of this first time home buyer program!

Thanks go to John McClellan of Supreme Lending in Austin, TX who gave a great presentation on this program!

Tagged as: down payment assistance, first time home buyer