Capital Area Finance Authority Announces New Enhancements to Home Loan Programs
September 7, 2017
Baton Rouge, La.—September 7, 2017—The Capital Area Finance Authority (CAFA) today announced two enhancements to one of their loan products that will be beneficial to many homebuyer families in the 29 CAFA Approved Parishes throughout South Louisiana. The announcement comes days before the ability for disaster victims to use FHA 203H loans ends on September 8, 2017.
Following the flooding throughout Louisiana in August 2016, through a Presidential declaration, homebuyers who were disaster victims were eligible to take advantage of the FHA 203(h) loan product to purchase a home. This product made it easier for them to get mortgages and become homeowners or re-establish themselves as homeowners.
As the ability to use the FHA 203(h) loan comes to an end, homebuyers can turn back to CAFA for financial solutions, which are especially important for a community still recovering from recent disasters. Furthermore, these solutions are not only for low income or first-time buyers. To date, CAFA has already assisted a variety of homebuyers, totaling more than 300 families across South Louisiana with more than $1.9 million in non-repayable grant assistance with these types of programs.
“We’re excited to announce two enhancements to CAFA’s product portfolio that will provide more options and solutions for homebuyer families across the region,” said Ashley Logan, Lending Program Manager at CAFA. “At a time when our community continues to respond to disasters, this news, in tandem with Mark Drennen coming on board as president and CEO of CAFA, is reflective of the aggressive goals our organization has to expand homeownership and continue to be a positive catalyst for building community.”
Lifting Income Limits on Conventional Loans
One new enhancement is on CAFA’s conventional loan product, the Freddie Mac HFA (Housing Finance Agency) Advantage program. As per the FHFA (Federal Housing Finance Agency), Freddie Mac’s regulator, Freddie Mac recently lifted income limits on its conventional loan programs in Federally Declared Disaster Census Tracts.
CAFA has traditionally set its income limits on this product at 140% of Area Median Income (AMI) of each approved parish, however, CAFA is now following suit and is lifting its income limits on the Freddie Mac HFA Advantage Product (CAFA’s Conventional Loan Type on all three Programs currently offered).
The majority of Louisiana Census Tracts have been federally declared, meaning they no longer have income limits on CAFA’s HFA Advantage Conventional Loan down payment assistance product. As a result, more families will have access to the HFA Advantage Conventional Loan option because they will not be disqualified due to exceeding the income limits. To determine which Census Tracts have been Federally Declared as Disaster Tracts, visit here.
0% Grant Option to Conventional Loans
The second enhancement CAFA recently added is a NO grant assistance option to their HFA Advantage conventional loan product. If a qualified borrower who is not using a CAFA Grant makes a down payment less than 20%, they will need private mortgage insurance, which could result in a coverage rate of as much as 35%. If that qualified borrower uses CAFA’s 0% grant option on the HFA Advantage Conventional Loan product instead, they will receive 18% coverage for 97% LTV (loan to value), which results in a lower option for monthly payments on the private mortgage insurance. Essentially, if the qualified homebuyer has their own money to use as a down payment, they can take advantage of the 0% option and receive charter level coverage rates on their private mortgage insurance - helping to cut that borrower’s mortgage insurance monthly payment almost in HALF.
Should qualified homebuyers wish to use CAFA’s grant assistance, those borrowers can choose to receive 3%, 4% or 5% of the final loan amount in the form of a non-repayable grant. Borrowers can use CAFA grant money for the down payment of the house, closing costs, pre-paid items such as inspections, appraisals and deposits, or to assist them with the private mortgage insurance on a conventional loan.
To date, CAFA is the only housing financing agency offering 0% option and a true 5% grant in our 29 approved parishes. For more information on CAFA’s HFA Advantage Conventional Loan, visit http://www.thecafa.org/homebuyer/programs/.
About Capital Area Finance Authority (CAFA)
CAFA works toward advancing vision and opportunity among the nine parishes surrounding Baton Rouge by offering funding to those with a mission to better our community through commercial development, residential development, and public infrastructure, and to those looking to better their lives through home ownership. CAFA issues bonds and uses the proceeds to provide financing for housing in nine parishes: East and West Baton Rouge, Pointe Coupe, East and West Feliciana, Iberville, Ascension, Livingston, and St. Helena. CAFA also has Cooperative Endeavor Agreements to offer lending programs in several other parishes throughout southern Louisiana. Since its inception, CAFA has made a major contribution to homeownership and economic development in the Capital Area parishes by providing over $1 billion in competitive conventional market rate funds to more than 16,000 households. For more information on CAFA’s programs, visit www.thecafa.org or call (225) 771-8567.