The Delaware State Housing Authority (DSHA) launched two new programs aimed at making home ownership more affordable by helping buyers with mortgage costs and home repair fees.
The programs, announced during a DSHA event Tuesday, correlate with the state’s efforts to encourage homeownership.
“There are definitely people who want to be renting….but there’s no question if people are ready to buy a home we know what it can do in terms of building equity for themselves and their financial future, and it’s also good for our community,” said Gov. Jack Markell, D-Delaware.
The DSHA Paid Mortgage Insurance program promises to give buyers a lower monthly housing payment by removing the mortgage insurance requirement if they don’t have a 20 percent down payment at the time of settlement.
The Home Purchase Rehab program gives buyers the opportunity to get one low interest rate loan to purchase a home and make any repairs or energy improvements.
Qualifications for the programs include a maximum loan amount of $417,000 and an applicants’ maximum household income of $97,900.
Additional state funding is not needed for the programs because the first is self-sustained by bundling loans and selling them to investors, and the second is funded by the reallocation of already existing funds.
Paid Mortgage Insurance program
Home buyers who want to purchase a home but don’t have a 20 percent down payment are often required to pay an additional monthly bill for mortgage insurance, according to the DSHA.
The Paid Mortgage Insurance program will pay the required mortgage insurance cost on behalf of the home buyer in exchange for a slightly higher interest rate on the loan.
DSHA says the home buyer will have a more affordable monthly housing cost because they won’t be required to pay the monthly mortgage insurance premium in addition to their regular monthly mortgage payment.
Participants of the program could save more than $70 a month and $900 a year, according to DSHA.
“The more loans we make the better it is, but our goal is for every Delawarean who is ready to buy a house to know about our programs at the state level,” said Anas Ben Addi, DSHA director. “We’re not forcing anyone to take our loans but at least consider it as an option.”
Home Purchase Rehab program
The Home Purchase Rehab program allows home buyers interested in purchasing a home in need of repair or upgrades to have the cost to purchase the home and the cost of repairs up to $35,000 combined into one loan.
DHSA also increased the down payment assistance available up to $10,000 to help cover the cost of rehab inspections and other costs.
Ben Addi said he talked to several buyers who need a four bedroom home for their family, but can’t afford the costs to repair a “fixer upper.”
“They don’t want to take the gamble to buy it and go through a home equity loan or a line of credit to rehab it,” he said. “So with this they see the numbers upfront and get qualified based on the mortgage and the rehab and if they qualify they work with a contractor and get it done.”
While this program is not aimed at downtown Wilmington specifically, it could also help urban areas repair crumbling homes and give families the opportunity to own for the first time.
“Many affordable homes still need minor repairs,” Markell said. “These are easily remedied repairs to the otherwise perfect house that too often keeps a family from purchasing their first home.”