Tuesday, April 20, 2010

Bond, DC Bond

After much anticipation, the DC Bond, available through the DC Housing Finance Agency, is back in action, having hit the market on April 14th with a freshly funded mandate. The interest rate for borrowers is set at 5.25% with zero points and is currently only available as an FHA loan or a Veterans Administration loan, though financing without FHA or VA is being considered. The new bond requires all loans be purchased by Ginnie Mae. Funding for the program will likely run out come October, as it did last year, so any transaction would have to close prior to the fall.

As intended, the DC Bond program will largely benefit low-income borrowers. Lenders point out that FHA loans currently carry a 5.0% interest rate with no extra points (though all FHA loans, DC Bond and otherwise, come with a 2.25% up-front financing cost), noticeably lower than the 5.25% DC Bond rate. The true winners are therefore those who qualify for buyer down payment assistance, i.e. $10,000 towards a down payment or closing costs for qualified borrowers who have little to no cash upfront. To qualify, an individual must make less than $57,500; couples less than $65,700. A family of four can qualify if the household earnings are less than $82,200. DC Bond borrowers cannot finance more than $417,000.

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