Facts About Deferred Loans

Deferred Loan #1

• Secured as a zero-interest, deferred* second mortgage on your new home.

• Assists you in meeting your down payment and/or closing costs obligations.

• Maximum amount of loan is $6,000 and the amount you receive will depend upon your mortgage lender’s requirements.

• One-half of this loan will be forgiven following a period of 5 years provided you own and occupy the home during the entire 5-year period.

Deferred Loan #2

• If utilized, it is secured as a zero-interest, deferred* third mortgage on your new home.

• Used only for repairs authorized by the City after closing on the home for a limited time.

• Maximum amount of loan is $5,000 and the amount you receive will depend upon the cost of repairs.

• This loan is not to be used for Health and Safety code violations identified prior to purchase. Those types of repairs are required to be paid for and completed by the seller prior to closing.

• This loan is forgivable after 5 years, provided you own and occupy the home during the entire 5-year period.

These zero-interest, deferred loans are secured as a second and a third mortgage on your new home and will be payable to the City when you sell your home, no longer occupy your home as a primary residence, or upon refinancing your first mortgage.

Applicants must not have owned a home within the last three years unless they are single parents with custody of minor children.

Program applicants should have a credit history free of delinquent obligations, and have a demonstrated ability to qualify (a.k.a. pre-qualify) for a first mortgage loan with an approved lender.

• Applicants must be able to provide $1,000 of their own money to complete the home purchase.

• Household income may not exceed the following amounts, based on household size.

  • 1 - $34,250
  • 2 - $39,150
  • 3 - $44,050
  • 4 - $48,950
  • 5 - $52,850
  • 6 - $56,800
  • 7 - $60,700
  • 8 - $64,600

• Are more than one year old. (For new construction, see our “New Construction and Infill Housing Incentives” program.)

• Are located within the City's Homeownership Assistance Areas.

• Sell for $85,700 or less.

• Are free from Health and Safety Defects and meet City Codes as determined by an inspection performed by a City of Wichita Housing Services Inspector.

NOTE: HUD homes, homes sold under installment sale agreements, or homes sold under Contract for Deed agreements ARE NOT ELIGIBLE FOR THIS PROGRAM!

1. Submit an application to the City of Wichita Housing Services Department. You can pick up an application at our office located at 332 N. Riverview or access the HOMEownership Program Application on our website.

2. Attend and complete a city-sponsored homeownership training session. You can register for one of these sessions by contacting Mennonite Housing at (316) 942-4848, Community Housing Services at (316) 685-2656 or the Urban League of the MidPlains at (316) 262-2463. You may be charged a nominal fee to attend this training.

3. After submitting your application, your income and credit will be verified by the HOME 80 program staff. Applications that are incomplete or that do not include ALL of the requested documentation WILL BE DELAYED. Therefore, it is imperative that you review your application BEFORE submission and be sure that you include ALL the information the application specifically requests, including signatures.

4. When your application is approved, you will receive your HOME 80 funding commitment letter from the HOME 80 program stating that funds are reserved for you to purchase a home. If you are not approved you will receive a declination letter in the mail.

5. When/If you are approved for the HOME 80 program you need to schedule a “pre-qualifying” appointment with a reputable lender (e.g., mortgage company, bank, etc.) offering competitive interest rates, if you have not done so. There is a possibility that you may have to resolve some credit problems or other home financing issues prior to qualifying for a home loan. The following links below may be useful to you and we encourage you to visit them.

   HUD > Predatory Lending

   HUD > Don't be a Victim of Loan Fraud!

6. Once you pre-qualify for a loan, begin shopping for an existing home that fits your budget and needs.

   IMPORTANT: Homes built prior to 1978 are presumed to have lead-based paint. Be wary of homes exhibiting defective (i.e. chipping, peeling, scaling, cracked, blistering) paint. Lead-based paint can be a health hazard to you and any children in the household, and will likely cause the house NOT to pass the City’s inspection. If the house does not pass inspection, you cannot purchase the home.

7. The City must notify your seller in writing that you will be getting assistance with your purchase! Therefore, you must contact the HOME office at (316) 462-3766 before your seller signs a contract so that we can send a Relocation Letter to you or your realtor. If you neglect to inform the City that you and your seller intend to sign a purchase agreement without notification, the property may no longer be eligible under this program. Federal rules regarding lead-based paint and relocation apply to your subsidy and require the advance notification of assistance.

8. A copy of the purchase contract signed by all parties and the original relocation letter signed by the seller must be provided to the HOME office. Our staff will then request the City inspection. If our inspection reveals that deteriorated paint is present in the home, the seller will be required to correct this problem, as well as other health and safety defects. The seller may not be willing to contractually commit to doing so. You CANNOT purchase a home with the City’s financial assistance that does not pass the City’s inspection.

9. Once you have an approved property under contract, you must obtain commitment for a first mortgage loan from a lender. Please have your lender send a copy of the "good faith estimate" to our office.

10. Close on the loan and the purchase of your home. It is now your pleasure and responsibility to make all monthly payments. As stated on the opposite side of this form, the zero-interest, deferred loan(s) you receive from the City are secured by a second mortgage for the down payment and closing costs loan, and, if utilized, a third mortgage for the City-approved repairs loan. You will be required to repay the deferred loans in full at the time of resale, or when you cease to use the property as your principal residence, or when you refinance your first mortgage. The loan provided for the City-approved repairs will be forgiven after a period of 5 years from the date of the original purchase provided the original HOMEownership 80 buyer occupies the home and has occupied the home during that time. In addition, one-half of the loan provided for down payment and closing costs will be forgiven at that time.

Revised 2/2007

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