Mortgage Credit Certificate (or also referred to as MCC) is a federal tax credit available to first time home buyers who meet certain requirements. With the tax credit, eligible home buyers can adjust their their withholding to take advantage of the savings monthly instead of waiting until they file their taxes. The MCC remains available as long as the borrower owns and occupies the property.
The Washington State Housing Finance Commission offers several mortgage programs with various types of down payment assistance for home buyers. In order to qualify for the program, home buyers need to have household income of $97,000 or lower and attend a WSHFC sponsored home buyers class.
Let me start by saying there’s nothing wrong with having an FHA insured mortgage. FHA mortgages have been a resource for first time home buyers and borrowers who lack significant down payment since their inception 40 years ago…. BUT with the increases to the upfront and monthly mortgage insurance premiums and the reduced loan limits, many borrowers could be better off considering loans other than FHA.
When I’m working with a home buyer who’s considering an FHA mortgage, here are some of the other mortgage programs I suggest they consider:
This past weekend, Fannie Mae implemented new underwriting standards raising the minimum down payment for a conventional loan from 3% to 5% down…with an exception. The exception allows for certain community based programs, like those offered through the Washington State Housing Finance Commission to still provide 3% down conventional mortgages. I have confirmed with WSHFC that the Home Advantage Program will continue to all a minimum 3% down payment.
For more information about the Home Advantage Mortgage Program, please click here.
I’ve been studying the different loan programs in WA State and came across your website. We’re considering taking out a Home Advantage mortgage but need clarification on one of the restrictions.
Freddie Mac’s Home Possible Mortgage is a great mortgage program designed for first time home buyers. What’s so special about this program is that it allows a home buyer to qualify for dramatically reduced mortgage insurance premiums with a minimum 5% down payment. The 5% down payment may be gifted by a family member. No reserves are required for a single family dwelling.
My most recent guide book, Your First Home Mortgage, is filled with information that I hope first time home buyers will find useful. Please feel free to share this book with anyone you know who is considering buying their first home.
You can find a collection of my other guide books and slide shows by visiting the Mortgage Porter library.
Remember, if I can help you with your mortgage needs, including buying or refinancing a home located anywhere in Washington state, I’m happy to help you! Click here for a free rate quote.
PS: If you’re interested in attending one of my home buyer seminars sponsored by the Washington State Housing Finance Commission, click here.
UPDATE February 21, 2014: Conventional financing currently has increased the minimum down payment to 5% from 3% unless you are considering the Home Advantage Mortgage Program. Mortgage programs and guidelines change constantly so please check with your local mortgage professional regarding what is currently available for you.
I’m pricing out a scenario for a first time home buyer who’s looking at buying a home priced at $250,000 and they have roughly 3% set aside for down payment plus closing cost. Since they have excellent credit, they are leaning towards conventional financing instead of FHA, which has much more expensive mortgage insurance (upfront and monthly).