MyPad Down Payment Assistance

The City of Sioux City is offering MyPad – a down payment assistance program.  This program provides for a minimum of $1,000 and a maximum of $14,999 in down payment/closing cost assistance to home purchasers whose family incomes are between 50 percent and 80 percent of the median income for Sioux City, Iowa.  Amount of assistance needed is dependent upon the buyer’s circumstances and will be the minimum amount of cash needed to close. Applicants with a need of less than $1,000 are not eligible for assistance. All applicants will need to apply through the City of Sioux City Housing Authority to determine mortgage readiness. Financing will be limited to HUD approved financing products.

 Eligibility Requirements

1. All approved applicants must be low income as defined by the Department of Housing and Urban Development. Low income for the purposes of this program is defined as total family income being between 50 percent and 80 percent of the median income for Sioux City, Iowa.
2. Applicants must have completed an initial screening and underwriting including a credit and budget review to determine mortgage readiness with the Sioux City Housing Authority.  The applicant must be able to obtain a mortgage without the assistance of a co-signer.
3. Applicants must complete a Pre-Purchase Home Buyer Counseling and Education class provided by the Sioux City Housing Authority.
4. All approved applicants must have an accepted offer to purchase a home within 60 days of qualifying for this program and have a HUD approved loan application in process.

Restrictions

A. Financing will be limited to HUD approved financing products. Financing must not require a co-signer.

B   Must not currently own a home.

C.  The family must purchase a home within the city limits of Sioux City, Iowa.

1. Potential applicants must NOT have an accepted offer on a home prior to completion of Pre-Purchase Home Buyer Counseling and Education offered by the Sioux City Housing Authority.
2. Home purchased must pass Housing Quality Standards (HQS) inspection.

All MyPad closings are allowed one HQS inspection and one reinspection at no direct cost to the applicant. Homebuyers may be charged an additional HQS inspection fee of $75 if more than one reinspection is required or if the homebuyer makes a second offer which requires a subsequent new HQS inspection to utilize MyPad down payment assistance. Payment must be made directly to Sioux City Housing Authority, no later than 5 days prior to closing. MyPad funds will not be released if payment is not received.

1. Home purchased must be owner occupied throughout 5 year period of deferred    payment loan.
2. Sale price cannot exceed $106,000.
3. Only owner-occupied or vacant rental property is eligible for purchase under this program.
4. Short sale purchases are not eligible.
5. The borrower’s monthly housing debt (including PITI, mortgage insurance and homeowner’s association dues, etc.) cannot exceed 30% of the household’s gross income.
6. The ratio of the borrower’s monthly cost for housing plus ALL other monthly debt (student loan, car payment, credit cards, etc.) cannot exceed 40% of the household’s gross income.
7. Cash to borrower at time of closing cannot exceed pre-paid expenses by applicant outside of closing.
8. MyPad cannot provide assistance in the case of contract buyers.

Application Process

1. The Sioux City Housing Authority will mail an application to interested applicants who appear to be eligible. Should it be determined that the client is not yet mortgage ready, or is not income eligible the client will be encouraged to seek additional counseling in order to become mortgage ready and purchase a house in the future.
2. Sioux City Housing Authority (SCHA) will meet with all interested applicants, determine program and income eligibility. The completed application must be submitted to Sioux City Housing Authority with verification of mortgage readiness.  Applicants will be required, at their own expense, to provide all documentation necessary to verify income. The family will need to provide a copy of their credit score. After determining initial eligibility based on mortgage readiness the applicant will be enrolled in the required Pre-Purchase Home Buyer Counseling and Education.
3. SCHA will require the applicant to attend the Homeownership Pre- Purchase Education course offered at through the Sioux City Housing Authority.
4. After SCHA has verified that the applicant meets the income and eligibility guidelines, and the applicant completes the Pre-Purchase Home Buyer Counseling and Education, the SCHA will issue a letter of certification to the applicant. The certification of eligibility for down payment may be presented to a financial institution that offers Iowa Finance Authority First Home Programs or other comparable products as proof of eligibility for the MyPad Program.

Certification

1. Applicants will be selected to be issued Certificates of Down Payment Assistance by date of eligibility determination, date of application and completion of the Pre-Purchase Home Buyer Counseling and Education Class.
2. After SCHA has verified that the applicant meets the income guidelines and the applicant completes the Pre-Purchase Home Buyer Counseling and Education workshop, the SCHA will issue a letter of certification to the applicant. The certification of eligibility for down payment may be presented to a financial institution as proof of eligibility for the MyPad Program.
3. The SCHA is not required to re-examine the family’s income at the time the HOME assistance is provided, unless more than six months has elapsed since the SCHA determined that the family qualified as income eligible.
4. The applicant is responsible for obtaining mortgage financing on the home being purchased. The mortgage financing must be a HUD approved financing product.  Applicants will be able to choose between FHA, VA or a conventional loan under this program.  The interest rate of the mortgage loan is fixed for the life of the loan, which is a 30 year period. Check with a participating lender for the current rate. Exceptions to the 30 year fixed rate financing would be Habitat for Humanity loans which are 20 year terms.
5. The lenders will meet with the applicants to qualify for a loan.  They will be required to provide copies of the loan application and income verifications and submit closing statements and funding requests.
6. The applicant must secure an accepted offer on a home and be within the process of packaging a mortgage with an approved lender within 60 days of receiving the certification. Extensions may be granted by the Housing Services Division Manager if an offer is pending or other extenuating circumstances exist.
7. Those applicants who do not have an accepted offer on a home or who are not within the process of packaging a mortgage with a lender within 60 days will forfeit their certificates. Said certificates will be issued to other qualified applicant.

Terms and Conditions

The applicant is responsible for finding their own mortgage financing through a private lender and may apply for the Iowa Finance Authority “First Home Plus” down payment/closing cost assistance program OR other comparable product in addition to this program. Upon securing the purchase of a home and obtaining mortgage financing, the applicant will receive the minimum amount of cash needed to close, $1,000, up to the maximum amount of assistance, $14,999 as a deferred payment loan for the specific purpose of applying toward a down payment and closing costs on the home.  Amount of assistance needed is dependent upon the buyer’s circumstances and will be the minimum amount of cash needed to close. Applicants with a need of less than $1,000 are not eligible for assistance.

The MyPad deferred payment loan will be secured as follows:

1. A promissory note and second mortgage will be recorded against the property to secure the deferred payment loan.
2. The deferred payment loan will be forgiven at a rate of 20% per year for 5 years if the applicant does not move or sell the property. At the end of the 5 year period, if the applicant has not vacated or sold the property, the mortgage shall be released.
3. If the applicant moves or sells the property within the initial 5 year period, the un-forgiven portion of the loan shall be paid back to the City.
4. Homebuyer may subordinate only when the property is being refinanced to secure a lower fixed interest rate and/or term and no cash is refunded to the borrower(s).

Program Termination

This program will be ongoing until all of the allotted funds are exhausted, or the program end by Council determination.

Program Administration

The Sioux City Housing Authority will determine initial eligibility through examination of mortgage readiness, including a credit review for the applicant. The Sioux City Housing Authority will determine income eligibility and final approval.

Applicants should contact Brenda Miller at the Sioux City Housing Authority by phone (712-279-6256) or e-mail (bmiller@sioux-city.org) with questions about mortgage readiness, homebuyer education, income eligibility, accepted offers, and questions about their certificate for eligibility for down payment assistance.                           

Lenders should contact Brenda Miller at the Sioux City Housing Authority by phone (712-279-6256) or e-mail (bmiller@sioux-city.org) with questions about acceptable loan products.