Helping You Help Homebuyers
HomeNow $0 Down Mortgage Program

The HomeNow program at MoFi allows approved lenders to provide down payment and closing cost assistance to eligible borrowers in the state of Montana. The program is very easy to use and has broad eligibility criteria. Choose from several program options and DPA structures to find the best match for your client. We established HomeNow as part of our mission to provide hardworking Montanans with access to resources that build long-term financial security. And it can be a great tool for you and your homebuyer clients.

View the Frequently Asked Questions for more details

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DPA Options at a Glance

Conventional Loans

  • Buyers must qualify for a Fannie Mae HomeReady loan.
  • Single-family homes, duplexes, condos, townhomes, CLTs, PUDs and Manufactured Housing allowed
  • Minimum 680 credit score
  • Income within the established HomeReady income limits. There is NO INCOME LIMIT for borrowers purchasing homes in low-income census tracts.
  • Purchase an owner-occupied, primary residence in Montana.
  • Assistance amount can be 3% or 5% of the total loan amount.
  • Assistance can be a one-time grant, or a no-interest, deferred second mortgage

 

Government Loans

  • Buyers must qualify for a FHA, VA, or USDA Rural Development (RD) mortgage.
  • Single-family homes, duplexes, condos, townhomes, CLTs and PUDs allowed
  • Minimum credit score: 640
  • Have incomes within the established limits: FHA and VA or RD.
  • Occupy the property as a primary residence in Montana.
  • Assistance amount can be 3.5% or 5% of the total loan amount.
  • Assistance is a one-time grant issued at time of the closing.

Quick Links- updated 6/13/18

FAQs

What mortgage programs are available?

HomeNow offers both government and conventional 30-year, fixed-rate mortgages. The Conventional Program uses Fannie Mae’s 3% down HomeReady mortgage. The Government Program uses Federal Housing Administration (FHA), USDA Rural Development and VA loans.

Do borrowers have to be first-time homebuyers?

Absolutely not! The program is available to all qualifying homebuyers and is not limited to first-time buyers.

How much assistance can a borrower get?

HomeNow offers two levels of assistance to cover borrowers’ down payment and closing costs. The conventional program offers assistance equivalent to 3.0% or 5.0% of the total loan amount. The government program (FHA, USDA Rural Development or VA) assistance equivalent to 3.5% or 5.0% of the total loan amount. For example, 5.0% of assistance on a home with a purchase price of $200,000 that requires a 3% down payment will receive $9,700 of assistance ([$200,000 - $6,000] X 5.0%), enough to cover the down payment and some or all of the closing costs.

How do my borrowers apply?

Borrowers apply for HomeNow exclusively through approved participating lenders. As program sponsor, MoFi promotes HomeNow, coordinates lender support, and funds the down payment assistance, but the lender stays in control of underwriting, processing and closing loans.

What is the minimum credit score?

HomeNow borrowers who qualify for government loans must have a minimum FICO score of 640. Those qualifying for conventional mortgages will have a 680 or greater FICO score.  Alternative credit and manual underwriting are allowed.

What are the income limits?

Income limits for conventional loans are based on the location of the home being purchased. Just type in the address on this cool HomeReady income eligibility tool. Addresses in low-income areas have NO INCOME LIMIT. In all other census tracts, income is capped at 100% of the area’s median income. Income limits for FHA and VA government loans are county-by-county and capped at 115% of area median income. For USDA-RD loans, income limits are generally higher and based on 1-2 person households and higher still for 3+ person households.

Is there a front-end ratio?

Agency-specific guidelines apply and HomeNow applies a back-end ratio overlays: for loans underwritten using an AUS, conventional loans require a 50% debt-to-income ratio and government loans require a 45% DTI. Both conventional and government loans may be manually underwritten. The maximum DTI for manually underwritten loans is 36% and the borrower must have 2 months PITIA reserves after closing (or per product guide if greater).

Do you look at a borrower’s assets?

We do not. Participating lenders must assess a borrower’s ability to repay based on their income and credit history but we do not consider or limit the size of the assets they may hold. Borrowers qualifying for conventional loans may even have an interest in another property as long as their primary residence will be the one purchased using HomeNow. By not applying an “asset test” and providing enough assistance to meet or exceed the down payment requirements, HomeNow allows borrowers to save for a rainy day, unexpected repairs or future investments.

Can borrowers combine this with other programs?

HomeNow generally works best as a standalone program with one notable exception: borrowers applying for a HomeNow loan can simultaneously apply for a Mortgage Credit Certificate (MCC), a powerful tax credit worth up to $2,000 of additional take-home pay annually.

Can HomeNow borrowers apply for a Mortgage Credit Certificate (MCC)?

Yes, the HomeNow program is unique among down payment assistance programs in being able to help borrowers take advantage of this powerful tax credit. An MCC can increase a borrower’s take-home pay by up to $2,000 every year they have a mortgage. Plus, this additional income can be used to help qualify a borrower for a loan. Many borrowers meet the household income and purchase price limits and the first-time homebuyer requirement or exemption. It’s easy to assess all three categories at Montana Housing’s webpage (they administer MCCs in Montana).

How Does MCC Work?

Lenders apply for an MCC on the borrower’s behalf during the mortgage application process. The MCC application fee can be financed and quickly recovered by the $2,000 annual cash benefit. As described by MCC administrator Montana Housing, “the MCC allows eligible homebuyers to receive a dollar-for-dollar reduction in their federal income taxes of up to 20% of the annual interest paid on their mortgage [subject to a $2,000/year maximum]. Borrowers can file an amended withholding statement with their employer, and increase their monthly take-home pay by the amount of the credit. This additional income can be used to help qualify a borrower for a loan. The MCC can be attached to any loan statewide, except for a loan financed through any other Montana Housing Program.” Once borrowers qualify for and receive an MCC, the tax credit value will be calculated based on the interest paid on the mortgage loan that year. The MCC will be in effect for the life of the original mortgage loan, so long as the home remains the principal residence of the homebuyer.

Does it work with manufactured homes?

Yes, we are able to fund a limited number of deferred 2nd loans to help borrowers who are purchasing double-wide manufactured homes and qualify for conventional, HomeReady mortgages. Some eligibility criteria are different than for purchase of stick-built or modular homes. See the Conventional Program Summary or the complete program guidelines for details.

Can HomeNow be used for new construction?

HomeNow loans can used to purchase or refinance a newly constructed home. However, HomeNow cannot be used for construction financing directly; instead, borrowers can use HomeNow to refinance builder-financed construction loans. It may be possible for participating lenders to provide construction financing and then work with the homebuyer to “take-out” the financing with a HomeNow loan.

Will borrowers face a penalty if they pay-off their loan early?

No, they will not. Life happens, circumstances change, and we can live with that. Borrowers who chose the non-repayable grant option will keep that and any additional equity they build by the time they sell the home or pay-off the mortgage. Borrowers who chose the deferred 2nd loan will not make any payments on it until they pay-off their 1st mortgage, at which point the 2nd loan is due and typically payable from the proceeds of the sale or refinance.

Are borrowers required to take home buyer education classes?

Education is always a good thing but only borrowers applying for conventional HomeReady loans are required to complete a class before closing their loan. You can do this online and on your own time or in a HUD-certified class. Borrowers applying for a government loan are not required to complete homebuyer education.

Are there any additional fees with this program?

Yes, additional funding fees total $705 at closing.

Are there any tax implications for the borrower?

No. Any grant funds for down payment assistance are treated just like a gift from a family member; borrowers who quality for conventional loans and chose the deferred 2nd loan for down payment assistance will pay 0% interest. In neither case does the down payment assistance have tax implications for the borrower.

When should I lock the interest rate and reserve down payment assistance funds for my borrower(s)?

We recommend locking the rate and reserving funds no more than 10-15 days prior to the borrower’s closing date. That provides the lender with ample time to deliver the loan to the Master Servicer for purchase after the closing.

Is there a limit to the amount of funds available?

No. We fund the program according to the anticipated need in the state. If we see demand increase, we will adjust program funding to meet the new level of need.

Am I a qualified lender?

Please refer to the list of participating HomeNow lenders in your city. If your institution’s name is not on the list, please contact us to learn how your institution can qualify to offer HomeNow loans.

How is the program funded?

HomeNow is a market-based solution for Montanans. MoFi finances the down payment assistance and sells the first mortgage on the secondary market to maintain liquidity in the program.