It is understood that NACA targets low – moderate income residents (targeted member) and low – moderate communities (targeted area). I am not a targeted member, but the property I am in contract with is in a targeted area.
What is the max amount of buy down points I would be able to purchase?
My counselor stated that a NACA grant would kick in and match my buy down points.
I haven’t seen much information on it and my mortgage counselor said she just received a training on this and don’t remember the exact details.
I bought in a targeted area and was not a target member. The points we could buy down were 7 points, and there was no match. The city we’re in causes NACA to use Citibank mortgage rather than Bank of America, and I believe there is a difference in how the buydown and grant process works depending on which bank is used.
Whether or not you are in a targeted area or a targeted member has absolutely nothing to do with how many points you may buy down.
The two are far too commonly confused with one another, even though the only thing they have in common is a requirement relative to the median income for your Metropolitan Statistical Area (MSA)
Whether or not you are a targeted member (making less than 80% of the median income for your MSA) or buying in a targeted area (a Census Tract with a median income less than 80% of that for the MSA) only affects whether or not you are subject to the regional Maximum Acquisition Cost. If you are a targeted member or buying in a targeted area, there is no MAC and you may borrow up to the maximum amount allowed by the Conforming Loan Limits established by the Qualified Mortgage rules, as long as it remains within your affordability.
With regard to the buy down program, if you make less than 100% of the median income for the MSA, the bank will match any funds in excess of the seven point maximum you may provide for interest rate buy down. Your funds over seven points will go to principal reduction and the matching funds will be used to further buy down your interest rate.
There are some differences between BOA and Citi regarding how those initial seven points are specifically used, but this has no bearing on the seven point threshold or the lender match.