Down Payment/Closing Cost Assistance Program: FAQs for Lenders
Who is qualified to apply for the program?
What are the terms of the loan?
- First-time homebuyers, or buyers who have had no ownership interest in any residential property within the last 3 years in or outside the United States. (This includes undeveloped land and inherited real estate, whether or not they actually occupied the property as their primary residence).
- Gross Annual Household Income between $33,100 and $77,250
- Middle credit score of at least 660
- Buyers who demonstrate a need for funding (ie. limited liquid assets/savings)
- Buyers who have lived or worked in Loudoun County for at least the last 6 months (exceptions for military returning from active duty assignments)
- Buyers who are able to contribute at least $1,000 of their own funds towards down payment/closing costs
- Debt-To-Income Ratio of 30/40. (Buyers with ratios up to a max of 32/42 will be considered as long as there are three compensating factors). Ratios greater than 32/42 are ineligible for financing.
The loan is secured by a second lien on the home for a 30-year term at a fixed rate of 5.00%. The maximum loan amount is $25,000 (or 10% of the purchase price – whichever is less). There is no prepayment penalty. Subordination for a refinance with no cash out will be considered. Approval by the Loan Committee is required.
The buyer is also participating in the Affordable Dwelling Unit (ADU) Purchase program. Can they use the DPCC program in conjunction with the purchase?
Yes. Many ADU buyers take advantage of one of the county’s housing finance programs.
Are all first trust types eligible in the program?
DPCC loans may be used in conjunction with several first trust products, such as Conventional, FHA, VA or VHDA. Other types will be subject to program approval. Subprime or ARM mortgage products are ineligible for the program.
How much cash does the borrower have to bring to closing?
The borrower must contribute a minimum of $1,000 cash.
How long does the application process take?
Applicants will typically hear from the county within 3 to 5 business days after submission of the full application. The entire application process from start to finish will typically take at least 30 to 45 days. Processing could take longer if documentation is missing from the application packet. Applicants will be notified about any outstanding items. Encouraging the buyer to provide all required documentation with their application submission could help minimize delays.
What do you need from lenders to keep the application process moving?
The first items we will need your assistance with include providing a copy of the 1003 and Loan Estimate or Initial Fee sheet. After pre-approval, we will request a “Request for Reservation of Funds” form which must be completed by the lender. You can also assist clients by sending documentation on their behalf should they request your help.
Are there any other conditions the buyer must meet to qualify?
Yes. The buyer must present a Certificate of Completion of the VHDA
Homebuyer education class prior to settlement. Recipients must also attend the county’s HomeCents
post-settlement seminar within 6 months of closing. There is also a required $200 servicing fee which borrowers will be required to pay at settlement. The fee may not be financed.
My client was denied. Is there an appeal process?
There is no appeal process for the program and loan decisions are final. However, buyers may apply again after one year to be reconsidered for approval.
How soon can we go to settlement after approval?
If all required documentation has been received from the applicant, lender, and the title company, settlement can occur within about 15 business days. This is primarily because a minimum of 10 business days is required in order for the county to process a check in time for settlement.
My client would like to get their earnest money deposit back at closing. Is this allowed?
No. The buyer may not receive any cash out at closing. The approved loan amount will be reduced in order to avoid cash out.
My client is purchasing a condo with mandatory country club membership and fees. Can they use DPCC funds to finance these expenses?
No. Costs related to country club memberships are not permitted use of county funds and must be paid at settlement. Details of limits to common closing costs are in the Program Information document for lenders. All fees are subject to Loan Committee final approval.
What if the buyer wants to refinance in the future? Will the county subordinate?
Refinances will be considered if there is no cash out in the transaction. The county will not approve subordinations for Home Equity loans or a Home Equity Line of Credit. In these cases (or in the case of default), the remaining DPCC balance must be paid in full.