First-Time Homebuyer Program (Frequently Asked Questions)

What is the Homebuyer Program?

The Homebuyer Program is financial assistance in the form of down payment and closing cost money provided to a first-time homebuyer who is income-eligible, must be creditworthy, and does not owe any outstanding property taxes or service fees to the City of Fall River.  Rehabilitation may be included if necessary and financially feasible.

What are the qualifications to obtain a Homebuyer Assistance loan?

The participant must be a first-time homebuyer and must complete a certified homebuyer’s course. The participant must be an income-qualified household, must occupy the property as the principal residence for a period of 5 years, and must purchase the property with an approved form of ownership. The property must be a 1-4 family, manufactured or mobile home, or condominium, and it must be located in Fall River. Any lead paint must be abated. If there is rehabilitation involved, the property has to be brought up to code.

Who is a first-time homebuyer?

A first-time homebuyer is an individual and his or her spouse who has not owned a home during the three-year period prior to purchase of a home with HOME assistance.

What are the rent and income limits in HOME-assisted units?

 If the HOME funds assist units other than the homebuyer’s unit, then rent and income limits apply to all HOME-assisted units. The rent limits are the same as the Section 8 rents set by the Department of Housing and Urban Development (HUD).  These HUD issued rents include utilities and are based on the number of bedrooms in each unit.  There is a formula to calculate rent if the utilities are to be paid by the tenant. There are income guidelines, which are based on household size, for the homebuyer and any tenants living in HOME-assisted units. HUD updates the rent and income guidelines annually.

Where can I complete a Homebuyers course?

You can obtain information on the courses available in this area at Catholic Social Services (Maria Paiva @ 508-674-4681) or the Fall River Affordable Housing Corporation. (Bob Landry @ 508-677-2220).

How long is the term of the loan?

The term of the loan may run concurrent with the affordability period up to 20 years, and is dependent upon the amount of HOME funds borrowed and the ability of the borrower to pay it back.  Homebuyer loans usually have a term of 5 years

What are the interest rates?

 The interest rate is 1% for all HOME loans.

What are the on-going responsibilities during the affordability period and/or the loan term?

The homeowner’s insurance is verified annually during the term of the loan. There are periodic inspections to make sure the property is kept up to code for the duration of the affordability period. Borrower must sign a Certificate of Primary Residence annually for 5 years. If applicable, the borrower must provide our agency with certification of their tenants’ rents and incomes (including proof of income) every year on the anniversary of the completion of the project for the duration of the affordability period.

Do you give out grants?

We do not grant funds as such.  The homebuyer assistance portion of the loan is deferred for a 5-year period as long as the borrower complies with program restrictions during the affordability period.  Loan will revert to a grant. Lead paint abatement and handicap accessibility renovation loans up to $7,500.00 per unit are deferred until forgiveness as long as the borrower complies with program restrictions during the affordability period.  Loan will revert to a grant.

Are there any pre-payment penalties?

There are recapture provisions:  if a HOME-assisted property is sold within the affordability period, CDA has the right to recapture some, if not all, of the HOME assistance from the sale’s net proceeds, and may even be entitled to a portion of the proceeds.  The affordability period remains with the property until the expiration date; it cannot be discharged with the mortgage at time of sale or transfer of the property.

Is there an application fee?

No, but the homebuyer needs to work with a primary lender who is familiar with the HOME Homebuyer Assistance Program.

Can HOME funds be used to acquire commercial property?

No, not if it is strictly for commercial use.

In the case of rehabilitation, what types of repairs are eligible under the HOME Program?

Eligible repairs include bringing the property up to code, essential improvements, handicap renovations, and energy efficiency improvements.  Lead paint abatement is necessary.  Anything of a non-luxury nature is eligible.

In the case of rehabilitation, who inspects the work to make sure it’s being done properly and everything is brought up to code? 

We have a rehabilitation specialist in our office.  He/She performs the preliminary inspection, and writes up the in-house specifications and cost estimates.  The contractors’ bids are based on the in-house specifications.  The rehabilitation specialist also performs all inspections during the course of the project and makes certain that all work is up to code and falls within the specifications.  He/She is available to answer questions of both the contractor and the homeowner.

What are the FHA Mortgage Limits?

The estimated value of the property (after rehabilitation if applicable) cannot exceed 95% of the median purchase price for the area.