42 U.S.C. § 12852 — Assistance for first-time homebuyers

(a) In general: The Trust must provide assistance payments to first-time homebuyers, including people buying shares in limited equity cooperatives, in five ways: (1) Interest rate buydowns — paying down the interest rate so the homebuyer's mortgage rate never goes above 6%. (2) Downpayment assistance — paying amounts toward the downpayment, including closing costs and other costs due at closing. (3) Assistance connected to mortgage revenue bond financing — interest rate buydowns and downpayment help delivered the way subsection (e) describes. (4) Second mortgage assistance — loans secured by second mortgages, with interest and principal payments deferred. (5) Capitalizing revolving loan funds — grants to public organizations to set up revolving loan funds that help eligible first-time homebuyers, matched dollar-for-dollar by local investment; money repaid to these funds goes back into the fund for the same purpose. (b) Eligibility requirements: Assistance can only go to homebuyers and mortgages that meet these rules: (1) First-time homebuyer: The buyer must be an individual who (A) — and whose spouse — has not owned a main home in the 3 years before buying this property; or (B) is a "displaced homemaker" who otherwise meets (A) except for having owned a home with, or lived in a home owned by, a spouse; or (C) is a "single parent" who otherwise meets (A) except for owning or living in a home with a spouse while married; or (D) meets (A), (B), or (C) except for owning, as a main home, a structure that (i) is not permanently attached to a foundation under local rules, or (ii) does not meet state, local, or model building codes and cannot be brought into compliance for less than it would cost to build a permanent structure. (2) Maximum income of homebuyer: In the 12 months before applying, the total income of the buyer and family living with the buyer cannot exceed (A) 95% of the local area's median income for a 4-person family (adjusted for family size), or (B) 115% of that median income in a high-cost area under title II of the National Housing Act. The Board must certify income at first eligibility and recertify at least every 2 years after that. (3) Certification: The buyer (and spouse, if any) must certify they made a good-faith effort to get a market-rate mortgage and were turned down because their income was too low. (4) Principal residence: The mortgaged property must be a single-family home or cooperative unit and must be the buyer's main home. (5) Maximum mortgage amount: The mortgage's principal cannot exceed what could be insured on that property under the National Housing Act. (6) Maximum interest rate: The mortgage's interest rate must be fixed, at a maximum rate the Trust sets based on prevailing rates on similar mortgages. (7) Responsible mortgagee: The mortgage must be held by a lender that is federally insured, or that the Trust otherwise approves as responsible and able to service it properly. (8) Minimum downpayment: To get downpayment assistance under (a)(2), the buyer must already have paid at least 1% of the property's acquisition cost (not counting any mortgage insurance premium), as the Board estimates that cost. (c) Terms of assistance: (1) Security: Assistance payments are secured by a lien on the property. That lien ranks below every mortgage already on the property when the first assistance payment is made. (2) Repayment upon sale: When the property is sold, the assistance must be repaid, without interest, out of the net sale proceeds. If there are no net proceeds, or not enough to repay in full, the Board must release the lien for whatever remains unpaid. (3) Repayment upon increased income: If the buyer's (and family's) income goes over the (b)(2) income limit for any 2-year period after getting assistance, the Board may require monthly repayment of all or part of the assistance, based on how much was given and the buyer's income. (4) Repayment if property ceases to be principal residence: If the property stops being the buyer's (or family's) main home, the Board may require repayment of all or part of the assistance. (5) Available assistance: The Trust may give assistance under (a)(1) and (a)(2) for only a single mortgage per eligible buyer. (d) Allocation formula: Money available each fiscal year is allocated among the states based on each state's relative need — how much its eligible first-time homebuyers need this assistance compared with eligible buyers in all states combined. (e) Assistance in connection with housing financed with mortgage revenue bonds: (1) Authority: The Trust must give interest rate buydown and downpayment assistance under this subsection for mortgages financing homes that are either (A) financed with qualified mortgage bond proceeds, or (B) eligible for the mortgage credit under section 25 of title 26. (2) Eligibility: Buyers and mortgages must also meet subsection (b)'s rules, except (A) the certification in (b)(3) is not required, (B) the income limit in (b)(2) does not apply, and (C) instead, the buyer's and family's income in the 12 months before applying cannot exceed 80% of the area's median income for a 4-person family. (3) Limitation of assistance: Under this subsection, assistance is capped and phased: (A) Interest rate buydowns — the buydown cannot exceed 2.0% of the mortgage principal in year one, 1.5% in year two, 1.0% in year three, and 0.5% in year four. (B) Downpayment assistance — cannot exceed 2.5% of the mortgage principal. Availability — the Trust may give this assistance for only a single mortgage per homebuyer.