Low Income Housing
Market History and
Opportunity
Investment
Strategy
Critical
Housing Needs
LIHTC:
First Ten Years
Category B and C
Properties
Affordability
Sector of the
Housing Market
Consumer Trends
Political Trends
Target Market
Critical Requirements
Active Housing
Finance Agency
Environment
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Target Market Critical Requirements
As a general matter,
each state operates the bond-financed mortgage purchase program for first
time homebuyers. The mortgages are originated by local lenders that are
pre-approved in the state’s
network. The lenders then sell the mortgages to the state agency, which
purchases them with tax-exempt, private activity bond proceeds. Then
the state either services the mortgages internally, or pools them and
sells them on the secondary market.
Each borrower is subject to standard underwriting parameters agreed
to by the lenders and the state agency. They are also subject to
income
and purchase price limits. The income limit is set under federal
bond requirements at 100% of the area median income for households
of one
or two persons, and 115% of the area median income for families of
three or more.
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 Purchase price limits vary by location, but they are subject to federal safe harbors that are published annually by IRS revenue procedures.
There are also variations in income and purchase price
limits in state-designated target areas. In certain cases FHA or USDA
mortgage insurance may be layered as an extra measure of risk mitigation.
These programs are sometimes coupled with down payment
assistance, often funded by federal HOME, CDBG, USDA (in the case of
rural properties) or other funds, such as state housing trust funds.
While it is less common, local housing and development
authorities may also operate first-time homebuyer and/or down payment
assistance programs.
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