First Time Homebuyers Assistance and Educational Program
The First Time Homebuyers Assistance and Educational Program is designed to assist eligible low and moderate income households to buy a home in Plano by providing down payment and closing costs.
Who is a First Time Homebuyer?
- A potential buyer that has not owned a home in the last three years.
- In some cases, a First Time Homebuyer can be a displaced homemaker.
How much money can the Homebuyer receive towards down payment and closing costs?
The amount of down payment assistance is based on need. The two options are:
1. Community Development Block Grant (CDBG) funding, in the amount not to exceed $10,000, 0% interest (0% APR), deferred, forgivable loan, second lien position with a 5 year affordability period.
2. HOME Investment Partnerships Program (HOME) funding, in the amount not to exceed $55,000, 0% interest (0% APR), deferred, forgivable loan, with a 30 year shared equity agreement
How does a First Time Homebuyer Qualify for the assistance?
- Homebuyer(s) must receive housing counseling by HUD approved agency. Thus, we ask that applicant(s) starts the home buying process by contacting a HUD approved housing counseling agency first.
- Total household income must be 80% or less of the area median income (based on HUD's income eligibility guidelines) *** A Household includes the related family members and all the unrelated people sharing a housing unit such as partners or roomers.***
- Must be a U.S. citizen or a permanent resident alien
- Cash assets must be less than $30,000 (not including retirement accounts)
- The prospective applicants must have been pre-approved by a lender prior to a face-to-face appointment with a Coordinator. Documentation of lender pre-approval is required as part of the application submittal documents
- The Homebuyer(s) whose name appears as the owner(s) of the property on Deed of Trust, and spouse must have a minimum credit score of 620 to qualify. Spouse and/or co-borrowers without a credit score maybe eligible providing that non-traditional credit history (minimum of 3 creditors) can be verified and no more than two 30-Day late payments in the previous 12 months. Any judgments against the homebuyer must be paid off. Any bankruptcy must have been discharged for at least two (2) years and good credit re-established.
- The debt ratios of the homebuyer with credit score between 620 to 699 and/or the homebuyer with spouse and/or co-borrower without a credit score should not exceed 36% on the front end and 45% on the back end of gross monthly income. Homebuyers with a credit score of 700 or higher may increase their debt ratio up to 40% on the front end, 55% on the back end of the gross monthly income, but must have a 3 month cash reserve.
- Must attend an 8 hour First Time Homebuyer class held by the City
- Must be approved by an in-house underwriting process- please see underwriting guidelines linked below.
- The Homebuyer(s) must be employed at a minimum of 1 year. The applicant(s) with less than 6 months of employment with current employer must provide evidence that applicant has been working in the past 12 months.
- The Homebuyer(s) must contribute a minimum of $1,000 toward the down payment or pay for closing costs. Gift funds can be used to meet this $1,000 requirement, however, the Homebuyer(s) must make a minimum of $500 contribution from their own funds.
- The buyer may not receive any cash back at closing
- The Homebuyer(s) shall authorize the City of Plano to collect and receive any information needed from the lender or other sources necessary to ensure eligibility and funding. Buyers shall authorize the City to be provided the appraisal report, Uniform Residential Loan Application (Form 1003), the Loan Estimate, and the Closing Disclosure
- Complete the First Time Home Buyers Application Opens a New Window. . (Fillable PDF)
Current HUD Income Limits
2018 HUD Income Limits Opens a New Window. effective June 1, 2018
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What Properties are eligible for the program?
- Properties located in the city limits of Plano.
- Lender-approved insurable properties, new or pre-owned single family residences, condos, and town homes.
- Properties that meet local building inspections codes and that are free from hazardous living conditions.
- Properties that meet federal EPA regulations, including lead based paint testing, and federal relocation regulations.
HOME Homeownership Value Limits
The effective date of the 2018 Homeownership Value Limits is April 1, 2018. These limits remain in effect until HUD Opens a New Window. issues new limits.
Required Homebuyer Class
- All applicants, spouses and any other person whose income is used to qualify for the mortgage must attend the 8 hour Homebuyer Education class.
- Instructors are certified by the Texas State Affordable Housing Corporation and sponsored by the City of Plano, the City of McKinney, and the City of Frisco. However, the down payment assistance must be applied for and come from the city in which the home is located.
- The class is held on the 3rd Saturday of each month (January-November) from 8:30 to 4:30.
- The address for the class is 7501-A Independence Parkway, Plano, TX 75025.
- Click here to register for the Homebuyer Education Class Opens a New Window. Opens a New Window. Opens a New Window.
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Plano Homebuyer Education Class Opens a New Window. Opens a New Window.
What are the differences between the 2 down payment options?
Option 1. Community Development Block Grant (CDBG) funding, in the amount not to exceed $10,000, 0% interest (0% APR), deferred, forgivable loan, second lien position with a 5 year affordability period.
For this CDBG funding option, the Homebuyer(s) with household income at or below 80% of area median income may be eligible to receive up to $10,000 of down payment and closing cost assistance. With this option, the Homebuyer will be responsible for paying one-half of the down payment. The City will provide down payment and closing cost assistance of the amount not to exceed $10,000. The Homebuyer(s) is expected to reside in the home for 5 years. The loan is payable for a 5 year period, bearing no interest, and payable in 5 equal annual installments. However, each full year the Homebuyer(s) occupies the Property as their primary residence and complies fully with the terms, the payment of the principle amount is waived or forgiven. The remaining outstanding principal amount will be due and payable if, prior to 5 years, the Homebuyer(s) moves out, sells, leases, refinances (cash-out), obtains equity loan, transfers title, or violates a term of the Real Estate Lien Note.
Option 2. HOME Investment Partnerships Program (HOME) funding, in the amount not to exceed $55,000, 0% interest (0% APR), deferred, forgivable loan, with a 30 year shared equity agreement.
For HOME funding option, the Homebuyer(s) with household income at or below 60% of AMI may be eligible to receive up to $55,000 of down payment and closing cost assistance (Subsidy). Homebuyer(s) with household income above 60% but equal to or less than 80% of AMI will be eligible to receive up to $45,000 of Subsidy.
100% of the Subsidy will be forgiven if the Homebuyer(s) lives in the home as the primary residence and comply with the term for 15 years. However, if the Homebuyer(s) moves out, sells, leases, refinances (cash-out), obtains equity loan, transfers title, or violates a term of the Note, the Homebuyer(s) must pay back the entire amount of Subsidy plus shared equity.
Under this HOME funding option, although the Subsidy is forgiven after 15 years, the shared equity remains for 30 years and is forgiven after 30 years.
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Required Seller's Signed Documents:
Note: The City of Plano Promotes Equal Housing Opportunities in accordance with the Federal Fair Housing Law Opens a New Window.