HOME Program
How to Apply
- Participate in the HomeNet Homeownership Center HUD-certified Counseling Agency at NRHA for referral to the HOME Program;
The following referral documents are required from HomeNet:
- Lender Pre-approval Letter;
- Currently dated Verification of $3,000 in Savings (bank statement, receipt, etc);
- Credit Certification signed by a HomeNet HUD-Certified Counceling Agent; and
- VHDA Homeownership Educational Program Certificate.
Once the HOME Program receives the required referral documents, a HOME Program Application will be mailed to the client. Upon receipt of the completed and signed application, the client will be contacted by phone and an interview appointment will be scheduled. The client will be requested to bring required original documents pertaining to household composition, income and assets to the interview.
The HOME Program will obtain 3rd party verification of all household income and assets according to HUD guidelines. Once the 3rd party verification process is complete, the HOME Program will project the gross household annual income within the next 12 months based on the annual income and asset inclusions and exclusions defined in 24 CFR 5.609 of the federal code. If it is determined that the gross annual household income is within 80 percent of the HUD Area Median Income Limit for the household size, a Certificate of Eligibility and Mortgage Affordability Worksheet will be mailed to the client. If it is determined that the gross annual household income is over 80 percent of the HUD Area Median Income Limit for the household size, an Ineligibility Letter will be mailed to the client.
HOUSING SEARCH
Once the client receives a Certificate of Eligibility, a housing search may begin. The client will select the neighborhood in which to reside and select an affordable existing home or new construction home to purchase within the City of Norfolk. The client will submit an offer to the seller listing NRHA’s loan for downpayment and closing cost assistance as secondary financing and specify that the offer is contingent upon the property meeting NRHA HOME Program Property Standards Requirements for loan approval of secondary financing.
RATIFIED CONTRACT
Once the seller accepts the homebuyer’s offer and both the seller and buyer agree to all terms of the purchase agreement and all parties have signed the purchase agreement, this is what is referred to as a “ratified contract”. Once the contract is ratified, the following documents must be immediately (same or next NRHA HOME Program business day) submitted to a HOME Program staff member at NRHA.
- A legible copy of the ratified contract completely signed by all parties;
- Copy of Earnest Money Deposit Check;
- Copy of "Items to Convey Addendum", if items to convey are not specified in the contract;
- Property Inspection Contingency Addendum (if applicable) completely signed by all parties;
- Disclosure of information on Lead-Based Paint and/or Lead-Based Paint Hazards initialed and completely signed and dated by all parties (only applicable if the property was built prior to 1978) and
- A legible copy of the REIN Listing (if applicable).
MINIMUM HOMEBUYER CONTRIBUTION
The required minimum homebuyer contribution towards the purchase of the home is the greater of 1% of the sales price of the home or the homebuyer’s assets exceeding $10,000.referred to as excess assets. The minimum homebuyer contribution includes any cost incurred prior to closing such as: earnest money deposit, lender application fee, lender credit report fee, appraisal fee, etc. In addition to the required minimum homebuyer contribution, the homebuyer must be prepared to cover whatever balance of closing cost remains after the minimum homebuyer contribution and the $4,000 closing cost assistance from the NRHA HOME Program has been applied.
GIFT FUNDS
A Homebuyer may receive Gift Funds as part of their home purchase transaction; however the following restrictions apply:
- The gift is limited to $10,000;
- The gift can only be from a relative; and
- The NRHA HOME Program requires a signed and notarized statement from the relative providing the gift funds verifying that the funds are in fact a gift (not a loan) and that the assisted homebuyer is not required and/or obligated to repay the funds.
HOME WARRANTY
The NRHA HOME Program will order and purchase a one year comprehensive warranty for the homebuyer; unless a one year warranty is being provided to the homebuyer by the seller.
LOAN FOR BORROWED DOWNPAYMENT AND CLOSING COST ASSISTANCE
The downpayment and closing cost assistance provided to the homebuyer by the NRHA HOME Program is a loan (not a grant). On the Settlement Date of the home purchase, otherwise known as “the closing”, the homebuyer signs a Promissory Note and Deed of Trust agreeing to abide by the principal residence requirement, affordability period, forgiveness term, recapture restrictions, and refinance restrictions of borrowed funds. The NRHA Promissory Note is a forgivable, no interest and no monthly payment “soft second” loan. The homebuyer’s first mortgage loan is recorded as a first lien on the property and the NRHA Deed of Trust is recorded at the City of Norfolk Circuit Court Clerk ’s Office as a second lien on the property.
Additional Information
HUD-Certified Counseling Agency
Borrowers that are in need of credit score improvement (credit score less than 600) and/or credit repair (bankruptcies that have not been discharged and/or judgments/collections that have not been satisfied) should contact the HomeNet Homeownership Center at:
- HomeNet Homeownership Center at NRHA
201 Granby Street
5th Floor
Norfolk,VA 23510
757.314.4202
VHDA Approved Lenders
A list of all VHDA-Approved Lenders can be found on VHDA’s website at www.vhda.com.
Certificate of Eligibility
The Certificate of Eligibility provides a six month period in which a contact on a new construction home must be ratified or a closing on an existing home must occur - if not, eligibility expires and the “borrower” must reapply for NRHA HOME funds.
Mortgage Affordability Worksheet
The NRHA Mortgage Affordability Worksheet formula applies 35% of the household’s gross monthly income towards housing expenses, determines the amount of assistance the “borrower” is eligible for, and determines an NRHA suggested 1st Mortgage Loan amount and suggested Home Sale Price for the “borrower”.
NOTE: If the “borrower’s” actual 1st Mortgage Loan exceeds NRHA’s suggested 1st Mortgage Loan, the “borrower” must submit to the NRHA HOME Program a Spending Plan that justifies the affordability of a higher approved 1st Mortgage Loan.
Ineligibility Letter
The Ineligibility Letter specifies the reason(s) ineligibility has been determined and provides the denied applicant the right to appeal the decision. The appeal will be fairly considered and the NRHA HOME Program will provide a formal reply.
Existing Home
No waiting list applies to existing homes and there are no neighborhood restrictions. The Existing Home must be within the “borrower’s” affordability and must meet NRHA HOME Program Property Standards Requirements.
New Construction Home
A waiting list applies to New Construction homes developed by builders on NRHA parcels, with priority given to residents of Public Housing and Section 8 recipients. Applicants who have been waiting the longest also have priority - under Fair Housing rules.
The waiting list is only maintained and monitored at the HomeNet Homeownership Center. In order for an applicant interested in New Construction to be placed on the waiting list, it must be determined that the Sale Price of New Construction is within the applicant’s affordability. The neighborhoods in which NRHA has been able to provide affordable new construction housing are as follows:
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New Construction homes developed by builders on NRHA parcels undergo inspections conducted by the City of Norfolk and an NRHA inspection process to ensure compliance with NRHA approved plans, specifications and design standards.
No waiting list applies to privately developed New Construction homes. The privately developed New Construction home must be within the “borrower’s” affordability. New Construction Homes must meet NRHA HOME Program Property Standards Requirements as evidenced by a Certificate of Use and Occupancy issued by the City of Norfolk.
HOME Program Property Standards Requirements
**The Required NRHA Property Standards Inspection Is Not a Home Inspection**
NRHA assists individuals and families become homeowners by providing loans, with HOME or ADDI funds, for down payment and closing cost assistance to eligible first-time homebuyers.
NRHA does not guarantee the value or condition of your future home, and NRHA does not perform home inspections. If you find problems with your new home after closing, NRHA cannot give or lend you money for repairs, nor can NRHA buy the home back from you.
The Department of Housing and Urban Development (HUD) requires that the home you have selected to purchase with HOME and/or ADDI Down Payment and Closing Costs Assistance Funds be in compliance with applicable program property standards. It is for this purpose that NRHA performs a Property Standard Inspection. The NRHA Property Standard Inspection is not a home inspection. The NRHA Property Standards Inspection will identify readily visible problems with the property that are in non-compliance with NRHA HOME Homebuyer Program Property Standards which must be corrected prior to loan approval for down payment and closing cost assistance. These problems may or may not be the same as those items noted in the home inspection report.
When you make a written offer on a home, the contract must state that the offer is contingent on an NRHA Property Standards Inspection and that the home must meet NRHA HOME Program Property Standards Requirements for loan approval of NRHA secondary financing.
**For Your Protection Get a Home Inspection**
Buying a home is one of the most important purchases you will make in your lifetime, so you should be sure that the home you want to buy is in good condition. A home inspection is an evaluation of a home’s condition by a trained expert. During a home inspection, a qualified inspector takes an in-dept and impartial look at the property you plan to buy. The inspector will:
Evaluate the physical condition: the structure, construction and mechanical systems.
Identify items that should be repaired or replaced.
Estimate the remaining useful life of the major systems (such as electrical, plumbing, heating, air conditioning), equipment, structure and finishes.
It is important that you, the buyer, get an independent home inspection. When you make a written offer on a home, you should insist that the contract state that the offer is contingent (dependent) on a home inspection. As the buyer, it is your responsibility to carefully select a qualified home inspector. Ask the qualified home inspector you select to thoroughly examine the physical condition of your future home and give you the information you need to make a wise decision. You will have to pay for the inspection yourself, but it could keep you from buying a house that will cost you far more in repairs down the road. After the inspection is complete, you will receive a written report of the findings from the home inspector. Be sure you are satisfied with the results of the inspection and the condition of the home you are interested in purchasing.
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Excess Assets
Homebuyers with assets that exceed $10,000 must liquidate the excess asset amount and apply that amount towards the purchase of the home. This may also have an effect of reducing the amount of downpayment and closing cost assistance the Homebuyer is eligible for.
NOTE: The following types of assets are excluded from this rule:
- Funds in a Federally-designated Retirement Account (IRA’s, 401K’s, etc.)
- Funds in a State Approved College Savings Account
- Funds in a Burial Expense Plan
Principal Residence Requirement
The “property” purchased with borrowed downpayment and closing cost assistance must be the principal residence of the “borrower” during the affordability period. The “borrower” is not allowed to temporarily sublease the “property” (exceptions, with restrictions, can be made for military families with prior written approval from NRHA).
Affordability Period
The “property” occupied by the “borrower” as a principal residence must remain affordable for a specific period of time, depending on the amount of “HOME” funds invested. The affordability period for the “borrower” assisted with “HOME” funds is as follows:
- HOME Loan less than $15,000 has a 5-Year Term
- HOME Loan between $15,000 and $40,000 has a 10-Year Term
- HOME Loan greater than $40,000 has a 15-Year Term
Forgiveness Term
The date of forgiveness shall begin on the date of closing (Settlement Date). The borrowed “HOME” funds will be forgiven each annual anniversary date as follows:
- On a 5-Year Term Note for a HOME Loan less than $15,000 - 20% of the original amount of the NRHA HOME Note is forgiven each anniversary year.
- On a 10-Year Term Note for a HOME Loan between $15,000 and $40,000 - 10% of the original amount of the NRHA HOME Note is forgiven each anniversary year.
- On a 15-Year Term Note for a HOME Loan greater than $40,000 - 6.67% of the original amount of the NRHA HOME Note is forgiven each anniversary year.
Recapture Restrictions
Recapture Restrictions apply if the “property” is either sold or rented during the affordability (term) of the NRHA HOME Note - the unforgiven amount of the principle balance of the NRHA HOME Note must be repaid to NRHA, unless
- The property is sold to an income eligible buyer approved for HOME funds that can assume all or part of the unforgiven balance, or
- The Net Proceeds from the sale of the “property” at its fair market value are insufficient to the pay the unforgiven balance of the NRHA HOME Note in full, in this situation NRHA will forgive repayment of the amount of the unforgiven balance in excess of the Net Proceeds.
Refinance Restrictions
During the affordability period (term) of the NRHA HOME Note, the “borrower” is not permitted to refinance the “property” without specific written permission from NRHA. NRHA will allow the subordination of its lien interest only for the sole purpose of the “borrower” obtaining an interest rate reduction on a new 30 year fixed rate standard Conventional, FHA or VHA first mortgage loan with a principal balance that does not exceed the balance owed on the existing first mortgage loan. The “borrower” must make payable to NRHA the unforgiven amount of the principal balance of the NRHA HOME Note at the time of refinancing if cash or equity is removed from the “property” proceeds.