Woodbury First-time Home Ownership Program provides up to $30,000 in down payment assistance
The Woodbury First-time Home Ownership Program provides down payment assistance to make homeownership more affordable. Low-interest, deferred loans of up to $30,000 are available to buyers who have not owned a home in the past three years. Purchase prices must be $419,000 or less, and these funds can be used for single-family detached houses, townhomes, or condos. The first-time buyer requirement is waived for those purchasing a foreclosed home.
Program Overview: The City of Woodbury HRA has made down payment and closing cost assistance loans available to encourage homeownership in the City of Woodbury. Current available dollars for loans are based upon the fund balance for any given period.
Loan Amount: The maximum loan amount is $30,000.
Eligible Use of Funds: The loan funds can be used for down payment and closing costs. The borrower cannot receive any portion of these funds as cash.
Interest Rate & Deferred Loan Term: The interest rate is below market rate and will be fixed with simple annual interest, with monthly installment payments of interest only. Borrowers aged 65 or older or who are military veterans shall receive a discounted rate. First generation homebuyers shall have an interest rate of zero percent. Payment of principal will be deferred until sale, transfer of title, when the primary mortgage is paid off, or when the property ceases to be owner-occupied. Loan term shall not exceed 30 years
Loan Security: All loans will be secured by a mortgage in favor of the Woodbury HRA. Applicant will be required to obtain title insurance on this loan for the City of Woodbury HRA.
- First-Time Homebuyer Status: Applicant(s) must be a first-time homebuyer (a person or household that has not owned a home within the last three years).
- Debt-to-Income Ratio: Applicant “debt-to-income” ratio cannot exceed 50 percent. Current on Debt Payments: Applicant(s) must be current on any ongoing debt payments.
- Minimum Contribution: There must be a Minimum Contribution of 3.5 percent of the purchase price paid by or on behalf of the home buyer, capped at $10,000. Acceptable sources of the Minimum Contribution include earnest money, buyer funds brought to closing, lender credits or seller paid closing costs. The acceptable sources must be in the shape of seasoned funds that have been in documentable bank accounts of the applicant(s) for a minimum of ninety days prior to the loan closing. Buyer funds that result from a gift must be accompanied by a gift letter documenting the source as a relative. Down payment programs offered by the State of Minnesota (both due on sale and amortizing terms) would be acceptable sources to meet the minimum contribution. In no case shall proceeds from other personal loans, credit cards or debt instruments be allowed to meet this Minimum Contribution criterion.
- Income Limit: Applicant total gross annual household income shall not exceed $146,000.
- Education: All applicants must have 8 hours pre-purchase education or an online equivalent, as evidenced by an acceptable completion certificate. Applicants may work with eligible counseling agencies that are HUD-approved that have adopted the National Industry Standards for Homeownership Education and Counseling. Applicants who have previously completed their pre-purchase education through an approved provider must have a completion certificate that is dated not more than 12 months prior to closing.
- Approved providers for pre-purchase education: Department of Housing and Urban Development, National Commission for Health Education Credentialing, Framework – Recorded On Demand
- Borrower does not need to be a first-time homebuyer IF the property being purchased is in a foreclosed status, with the Woodbury loan recipient as the first owner-occupant after the foreclosure, OR the property is in foreclosure prior to the sheriff’s sale.
- Purchase price cannot currently exceed $419,000.
- Single family homes, townhomes, twin homes, or condominiums in the City of Woodbury to be used as the buyer’s principle place of residence.
- The first mortgage must be a prime/A-rated fixed rate mortgage loan.
- Properties may not be within the flood plain as identified by FEMA.
Loan Costs: Washington County Recording fee, title insurance, title company settlement fees, wire transfer fee and prepaid daily interest will be paid by the borrower(s) and may be paid from the Woodbury loan funds. Credit report fee will be paid by the borrower(s) at application unless a credit report is shared by the first mortgage lender that is dated within thirty days of the application. There is a $25 processing fee requested after the loan estimate is provided to the home owner.
Disbursement Process: After receiving the application and all of the documentation listed on the Application Process Sheet, the following procedures shall apply:
- If the application meets the program requirements, the loan funds (not to exceed $30,000) will be wired to the Title Company and the Woodbury loan documents will be sent to the loan closing
or title insurance company.
- The purchaser must sign the deferred loan note and mortgage at the loan closing. The loan closing or title insurance company conducting the loan closing will be responsible for recording
the mortgage. Documentation of the recording must be sent to the Woodbury HRA. The purchaser will pay the filing fee.
- After the loan closing, the title company must provide the Woodbury HRA with the original signed loan documents including the Note and Closing Disclosure, the City of Woodbury HRA’s Title Insurance Policy, and a copy of the first mortgage executed Closing Disclosure.
Effective date: April 14th, 2022
What do I need to get started?
Your loan officer will submit your application to the program for you. Please let your loan officer know you are interested in the Woodbury First-time Home Ownership Program.
Once your application has been received, your loan officer will contact you for any additional documents we need.