by Brandon Scott
The desire to own a home is inherent in all of us, is my personal belief. I think the struggle comes in when we have to overcome the hurdles or challenges to homeownership. And let’s not pretend, there are several challenges, credit or more importantly credit history and saving for the down payment and the closing cost.
In a recent article and video, I covered the Pathways program in Price George’s (PG) County that provide up to $10,000 in down payment and closing cost assistance. What if I told you that there’s another program in PG that also offers down payment and closing cost assistance, would you believe me? Well, you should because there is. The Prince George’s County Purchase Assistance Program (PGCPAP) offers first-time home buyers up to $15,000 in down payment and closing cost assistance. This program is funded through the Housing Investment Trust Fund that is part of the Redevelopment Authority of PG, so they have a vested interest in making ownership available to PG residents.
The maximum loan amount is $15,000 but of course there are two pieces that we are going to cover: eligibility and terms/program limits. The loan is allocated based on need for the funds. To be eligible you have to complete an 8-hour counseling class provided by a HUD certified housing counseling agency and receive a certificate of completion.
For certain professionals, there’s an additional $5,000 available for a total of up to $20,000. This would include Police Officer, Corrections Officer, Sheriff, Classroom Teacher, Firefighter, Emergency Medical Technician, or Nurse.
This program is open to anyone that wants to purchase a home in any part of Prince George’s County. It has to be a residential property, so that would eliminate a duplex or four-unit building. The property types you can use the loan with are pre-existing, also known as a resale, a foreclosure, a short sale and new construction.
The loan, itself, is not forgivable regardless of how loan you’ve been in the property. This means it must be paid back in full when the home is sold, transferred or is no longer your primary residence. But it is a zero percent interest deferred payment, or you don’t make any monthly payment on the loan and, as mentioned above, the total amount is only due once you sell the property.
As you think about this program, consider that you know up front that the funds have to be paid back. If you know that this is your first home and not your forever home, then this becomes a great vehicle to help you get into the ownership game, build some equity and wealth along the way. Also, the average homeowner stays in their property five (5) to seven (7) years. And if you’re smart about your purchase and buy in an area that is appreciating, within that timeframe your appreciation will be well worth it and paying back the $15,000 would be a small piece of your earnings. This also means you should do things to proactively increase the value of the home while you are there. If the carpet has seen better days, think of upgrading the floors, integrate technology into your home, add a fence, whatever it is do something to enhance your time there and to draw in a future buyer. People often think that the house will magically appreciate, while that sometimes happen, it’s the effort you put into it that really pays off in dollars. Think about it, have you ever gotten into a relationship and done the bare minimum, doesn’t make sense right. Same logic applies to your home.
Lender and Title
The lender can make or break the process, and you have to use one from the approved list of lenders. From the list of lenders, I recommend finding three that are in the running for your business, or work with your realtor to get a list of referrals. I’ve worked with several lenders on the list and would be glad to provide you with referrals as we work together.
Also, there is not a credit score requirement for this program. As an applicant, if you can qualify for a mortgage loan, then you will qualify for this program. PG requires that you meet the approval requirements of the participating lender selected.
This participation requirement extends to the title companies as well. The title company that settles the property, performs the research, etc., must be approved. I’ve also worked with several title companies on the approved list as well and glad to give you recommendations as we work together.
Funds and Income Limits
As the buyer, the program requires that you contribute some money toward the down payment. In this case, a minimum of 1.75% of the purchase price toward the purchase of the home must be provided by you. But this includes several contributions like earnest money deposits, inspection fees, homeowner’s insurance premium, credit reports, termite inspection, and housing counseling. As you can see, it’ll be fairly easy for you to meet that 1.75% requirement.
An additional requirement is that the gross annual household income above 80% not to exceed 120% of the area median income, adjusted for family size. This means that there’s a range, based on the size of your family that the household income can fall between. For a single person $65,650 to $98,450 and for a family of four $93,750 to $140,650. HUD has an income limits calculator that you can use to help see where you are. Plus, here’s a chart with income limits from PG, which may or may not have been updated. These are two resources, use both of them.
It just goes to show you that my approach is tried and true, establish a plan for obtaining financing and you’ll overcome many of the hurdles to getting into a home. You’ll set yourself and family on the path of financial and overall stability in life. Make sure you stay tuned and in tuned for even more great information.
Brandon Scott is a licensed real estate agent in Washington, DC, Maryland and Virginia. His license hangs with Coldwell Banker Dupont-Logan, DC. He’s been involved in the mortgage finance industry for the last 16 years in various fields. You can reach him by email at [email protected] Subscribe to his YouTube Channel at RealTea DMV