ARKANSAS DEVELOPMENT FINANCE AUTHORITY

SINGLE FAMILY

Homeownership Programs

Guidelines

ADFA “Move-Up”

Down Payment Assistance (DPA)

Arkansas Dream Down-payment Initiative (ADDI)

Mortgage Credit Certificate (MCC)

900 West Capitol, Suite 310

Little Rock, AR 72201

https://homeloans.arkansas.gov

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Eligible Property Types

Single Family Detached

Modular

Qualified Duplex

Manufactured Housing: Permitted by VA, FHA, or RD Program Guidelines.

Condos & Townhomes

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PROGRAM GUIDELINES Loan Term HFA Preferred Conventional:

Fixed Rate / 30 Year Amortization / Purchase Only

Government Loans:

Fixed Rate / 30 Year Amortization / Purchase Only

Must meet Conforming Loan Limit

Master Server ServiSolutions— A Division of the Alabama Housing Finance Authority:

7460 Halcyon Pointe Drive, Suite 200

Montgomery, AL 36117

P.O. Box 242967

Montgomery, AL 36124-2967

In Alabama: 334.244.9200 Toll-free: 800.325.2432 FAX: 334.244.9214

Down Payment

Assistance Program

DPA—2nd Mortgage: 10-year term, interest rate matches 1st Mortgage

Borrowers are able to receive up to $10,000 for down payment assistance, cash back at closing

for POC items, and plus additional $100.

Can not be used for repairs or to pay debt to qualify.

Borrowers may increase down payment thus reducing 1st Mortgage amount.

ADDI—Soft 2nd Mortgage: 5-year term, forgiven at 1/60th per month

Borrowers are able to receive 10% of purchase price, up to $10,000.

Can receive cash back at closing for POC items.

Can not be used for repairs, principal reduction, or to pay debt to qualify.

HQS Inspection required.

DPA and ADDI cannot be combined. Neither ADDI nor DPA are available independently without an

ADFA “Move-Up” 1st Mortgage.

Maximum Loan-To-Value

(LTV) & Combined-Loan-

To-Value (CLTV)

Follow each Program Guidelines for specific Maximum Loan-to-Value & Combined-Loan-To-Value.

First-Time Homebuyer No first-time homebuyer requirement for MOVE-UP, 1st Mortgage Loan; DPA, 2nd Mortgage Loan; or

ADDI, Soft 2nd Mortgage Loan.

Borrowers can own other properties per Fannie Mae-HFA requirements. See ADFA Mortgage Credit

Certificate Programs for additional information.

“ MOVE“ MOVE--UP ”UP ”

1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

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PROGRAM GUIDELINES Homebuyer Education Borrower (s) is required to take an 8 hour pre-purchase homebuyer education class or an e-home

online course through a HUD-Approved homebuyer counseling agency when using ADDI.

While using DPA with Conventional 95% and 97% loans, at least one borrowers is required to take the

first-time homebuyer education course, or have a valid course certificate within the last 12 months.

If both borrower are first-time homebuyers, all homebuyer education courses must be completed prior

to closing.

Follow Fannie Mae HFA Preferred homebuyer education requirements.

MCC Eligible Yes (First-time homebuyer purchase only). ADDI funds may be used for MCC fees.

See ADFA Mortgage Credit Certificate Programs, page 9, for additional information.

Income Limits DPA—No Income Limits.

ADDI—Household income limits apply by county. See HUD HOME Program Income Limits.

Rate Rate is set daily and sent to all participating lenders. Rate subject to change without notice.

DPA—Matches 1st Mortgage Rate (ADFA Move-Up).

ADDI—Not applicable.

Minimum Credit Score

ADDI—Has no credit score requirements. ADDI must be paired with ADFA Move-Up. Move-Up

has credit score requirements.

Eligible Purpose Single family detached or modular (1-4, condo’s and townhomes).

VA, FHA, RD or Fannie Mae Conventional loans types allowed.

Qualified duplex adhered to Fannie Mae guidelines.

Manufacturing housing allowed on FHA, VA or RD Loans ONLY.

Borrower (s) can own other property. **ADDI nor DPA are eligible for refinancing**

See ADFA Mortgage Credit Certificate Program for additional information.

Purchase Price / Sales

Price

DPA—Arkansas Conventional Conforming Loan Limit—$424,100 (no jumbo)

ADDI—Purchase Price Limit of $250,000

FHA VA RD HFA PREFERRED

CONVENTIONAL

CREDIT SCORE 660 640 640 640

“ MOVE“ MOVE--UP ”UP ”

1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

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FHA VA RD HFA PREFERRED

CONVENTIONAL

DTI 45% 45% 45% 45%

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PROGRAM GUIDELINES Non-Occupant

Borrowers /

Co-Signers

Non-Occupant Borrowers are allowed on all ADFA Programs. Per Product Guidelines.

Co-Signers can sign the Note, Loan Estimate and Closing Disclosure only. Cannot take title or be

on the Warranty Deed. Co-Signers can be on the DU.

ADFA does not need income documents on the Co-Signer.

Debt-To-Income Ratio

Maximum (DTI)

Manufactured Housing Manufactured Homes must meet all Arkansas State and corresponding program requirements (FHA,

VA or RD)

Manufactured Home has to be on a permanent foundation,

Classified as a real property, and

Title dissolved.

Required Lien Perfection Documentation

Collection of a DMV retirement confirmation document: Confirmation Letter from the AR Depart-

ment of Finance & Administration stating the mobile home certificate of title has been cancelled.

See Manufactured Housing Requirements for each Program:

Fannie Mae FHA

USDA Manufactured Homes

VA Manufactured Homes

PROCEDURES Lock-In ALL program reservations and rate Lock-Ins are from 9:00 am to 7:00 pm, Monday– Friday with

exception of ADFA holidays. https://adfa.mitas.com/MitasWeb/

Origination Loan originated in accordance with program guidelines, Fannie Mae guidelines, and DU findings

(Recommended running DU as soon as possible). No ADFA Exhibits required for origination.

Tax Transcripts / Tax

Returns

If Requested:

Most recent tax transcripts required for all the borrowers.

Self-employed, last 2 years tax returns required.

“ MOVE“ MOVE--UP ”UP ”

1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

MINIMUM

CREDIT SCORE

MAXIMUM

DTI

MAXIMUM

LTV

MAXIMUM

CLTV

640 (660; FHA) 45% 95% 105%

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PROCEDURES LLPAs No Loan Level Price Adjustment

Reservations ALL program reservations are from 9:00 am to 4:00 pm

May be reserved or ‘locked’ at application in our Reservation System, keep in mind the following:

Close loan within 30-days of reservation.

Loan will be cancelled if not closed within 45 days. Closing Package reviewed by ADFA.

70-day purchase timeline remains in effect from date loan is reserved or ‘locked’ in our Reserva-

tion System.

Desktop Underwriter HFA Preferred Conventional:

HFA Preferred through DU using the “Additional Date” screen; select “HFA Preferred”

ADDI or DPA Program in DU must be “Community 2nd Mortgage”

Desktop Underwriting recommendation of “Approve / Eligible”

Special Codes; SFC 741 HFA Preferred should be identified in the Findings

Government:

DU, LP or GUS

**Manual Underwriting not permitted.**

Fees Delivery fees netted out at purchase:

$200—Funding Fee

$71.50—Tax Servicing Fee

(ADFA pays 1.75% SRP on Conventional, FHA and RD loan; and 1.25% SRP on VA loans when sold

to the Master Servicer).

DPA:

No Fees

ADDI:

No Fees

Borrowers are able to receive cash back at closing to cover POC items.

ADFA pays for up to two HQS Inspections. Any additional inspections cannot be paid by the borrower.

(Initial & Final Inspection: $125 per inspection plus 42¢ per mile)

See ADFA Mortgage Credit Certificate (MCC) Program for additional fees when using this program.

Escrow Waivers HFA Preferred Conventional & Government: Not Permitted.

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PROCEDURES HQS Inspection DPA:

No HQS Inspection required.

ADDI:

U.S. Department of Housing & Urban Development requires HQS Inspection.

Lender is allowed to pick its own inspector (Business License & W-2 must be approved).

ADFA pays for Initial & Final Inspection (up to $125 + millage for each inspection).

ADFA must dispatch inspectors in order to pay them.

When using ADDI, please allow up to 45 days for closing. See ADFA ADDI

Closing Loans closed in accordance with standard Fannie Mae guidelines.

DPA:

Compliance submission package no longer required.

Awards letter sent prior to closing (award.letters@adfa.arkansas.gov)

ADDI:

Most current year tax returns with W-2’s, signed by borrower (s) unless self-employed.

Self-employed borrower (s) required 2 years signed tax returns, W-2/1099’s and YTD P&L.

Awards letter sent prior to closing (award.letters@adfa.arkansas.gov)

Buydowns HFA Preferred Conventional & Government: Not Permitted.

Assumable HFA Preferred Conventional: Not Permitted.

Government: Permitted per FHA, VA, or RD Guidelines.

Funding Originating lender will fund the 1st mortgage and 2nd mortgage at closing.

Points & Fees ADFA is exempt from ATR-QM (Ability to Repay and Qualified Mortgage Rule)

Delivery Loans must be bought by ServiSolutions within 70 days from loan reservation to avoid extension fee

of $375.

Documents must be uploaded using MITAS as a whole with separated cover scan sheets (preferred),

or individually.

MCC Eligible Yes (first-time homebuyer purchase only).

See ADFA Mortgage Credit Certificate Programs for additional information.

Uniform Closing

Dataset (UCD)

ServiSolutions requires a Fannie Mae UCD findings report in every Conventional Loan file. The re-

port must reflect “successful result” with transfer to AHFA. An embedded CD and no Hard Stop warn-

ings.

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1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

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PROCEDURES Documents ADFA:

DPA

1. Copy of DPA final loan application signed and dated by borrower and lender.

2. Copy of DPA Final Closing Disclosure signed at closing.

3. Copy of DPA Note.

4. Copy of Subordinate Mortgage.

5. Copy of Homeowners Insurance (ADFA listed as 2nd mortgagee).

ADDI

1. Original ADDI Note.

2. Copy of recorded ADDI Subordinate Mortgage / Copy of un-recorded.

3. Copy of recorded ADDI Mortgage Subsidy Deferred Note Agreement / Copy of un-recorded.

4. Copy of Homeowners Insurance (ADFA listed as 2nd mortgagee).

Appraisal Requirements HFA Preferred Conventional: Full Interior and Exterior Appraisal required; SSR from Fannie Mae

with successful result is required. If the SSR is rated at a 3 or higher an explanation from the lenders

underwriter detailing their appraisal review is required.

Government Loans: Full Interior and Exterior Appraisal required; FHA EAD report with successful

result required.

Mortgage Insurance

Coverage

(HFA Preferred

Conventional)

Subordinate Financing Must be an approved Community Second for Fannie Mae loans. Lenders are responsible for verifying

that the subordinate financing used meets approved eligibility.

Post-Closing Standard post-closing documents must be submitted to ADFA.

Original Recorded Documents must be submitted to ServiSolutions.

Miscellaneous The information contained herein (including but not limited to any description of ADFA and its lending

programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to

change without notice.

(The information contained in this product description does not modify, replace or substitute infor-

mation in the Fannie Mae Selling and Desktop Underwriting Guides and or related release notes or

supplements. Always check for Fannie Mae, ServiSolutions or ADFA announcements and updates

for current underwriting guidelines, changes and/or updates).

“ MOVE“ MOVE--UP ”UP ”

1st Mortgage Loan with Down Payment Assistance (DPA) or

Arkansas Dream Down-Payment Initiative (ADDI)

95% 97%

90.01% to 95% = 16%

85.01% to 90% = 12% 18%

80.01% to 85% = 6%

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PROGRAM GUIDELINES Term Credit may be claimed for the life of the loan, as long as the home is use as primary residence.

Purpose The Mortgage Credit Certificate was authorized by congress in 1984 Tax Reform Act to help lower-

income families afford a home. The program allows homebuyers to claim a dollar-for-dollar tax credit

for a portion of mortgage interest paid per year, up to $2,000.

The certificate is issued by ADFA and allows qualifying homebuyers to claim a tax credit of up to 50%

of the mortgage interest paid per year.

Amount Up to 50% of mortgage interest up to $2,000 tax credit per year that reduces the amount of federal

income tax paid by the borrower, giving more available income to qualify for a mortgage loan and

assist with house payments.

Tax Credit

Advantages Borrower may go to their employer and adjust their W-4’s to reflect the anticipated credit. This will

lower the borrower's federal tax withholdings and increase the monthly take home pay.

$2,000 Tax Credit ÷ 12 = $166.66 monthly results in additional income that can be used for qualifying

purposes.

First-Time Homebuyer First-time homebuyer is defined as a borrower who has NOT had an ownership interest in a

principal residence at any time during the three year period prior to the date of closing.

This ruling applies to a non-borrower spouse of any co-occupant.

“MORTGAGE CREDIT CERTIFICATE”“MORTGAGE CREDIT CERTIFICATE”

ADFA Mortgage Credit Certificate

Tax credit is equal to the

annual mortgage interest

paid multiplied by the

MCC tax credit rate of

50%.

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PROGRAM GUIDELINES Qualifications At Least One of the following must be met:

Must be a first-time homebuyer (No principal residence ownership within last 3 years).

Veteran or Spouse of a Veteran.

Purchasing a home in a Targeted County.

Targeted County A targeted county is a qualified census tract or an area of chronic economic distress as designated by

the IRS. If property is located in a targeted country, the first time homebuyer requirement does not

apply.

IRS Filling Form 1040 “U.S. Individual Income Tax Return”— Borrower must claim the tax credit when filling

this form annually.

Form 8396 “Mortgage Interest Credit”— Borrower must use this form to claim this tax credit.

Borrower may itemize if preferred.

Income Limits Household income limits apply. Maybe waived in targeted counties with prior ADFA approval.

See the ADFA Mortgage Credit Certificate (MCC) Program-Income Limits List.

Maximum Purchase

Price Limit

$270,000

Income Verification In non-targeted counties:

Most current year tax returns with W-2’s, signed by borrower (s) unless self-employed.

Self-employed borrower (s) required 2 years signed tax returns, W-2/1099’s and YTD P&L.

Non-Occupant

Borrowers /

Co-Signers

Allowed on all ADFA programs.

Can sign the LE, CD and Note only. Cannot take title or be on the Warranty Deed.

Can be on the DU.

MCC Co-signers are allowed and do not meet the first-time homebuyer requirement if they are

not occupying the property. Anyone occupying the property must meet the first-time homebuyer

requirement and sign Exhibit I.

ADFA does not require income verification documents from co-signer.

Fees $150—Lender Fee. Lender may charge up to $150 per each MCC transaction.

Issuance Fee—when using a participating lender’s fixed-rate and fully amortizing first mortgage 1/2%

(.50) of the loan amount as issuance fee will be charged for MCC. Payable to ADFA.

ADDI funds may be used for MCC fees. Other fees may apply if combining with any other ADFA Prod-

ucts.

Issuance Fee waived on MCC when using “ADFA Move-Up” 1st Mortgage Loan.

Issuance Fee waived on MCC when used without “ADFA Move-Up” 1st Mortgage Loan for Veterans,

or Spouse of Veteran ONLY (with Form DD214 required).

“MORTGAGE CREDIT CERTIFICATE”“MORTGAGE CREDIT CERTIFICATE”

ADFA Mortgage Credit Certificate

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PROGRAM GUIDELINES Eligible Purpose MCC is not eligible for refinance.

Documents 1. MCC Transmittal Checklist.

2. Copy of Loan Approval & Copy of Application.

3. Copy of Credit Report (non-targeted only).

4. Copy of Real Estate Contract.

5. Original Exhibit A, B, C, E, F, G, I, and P with County Income Limit Page.

6. Copy of Income Verification Documents.

7. Copy of Closing Disclosure.

Recapture Tax For the Recapture Tax to apply, ALL of the following conditions must be met:

Home is sold or disposed of within 9 years of being purchased, for reasons other than death, and

There is a capital gain on the sale of the home, and

Household income for the year in which you sell your home exceeds at least 5% each year, which

is the federal recapture tax limits.

We estimate that 97% of borrowers will not be subject to the Recapture Tax.

Disclosures MCC CAN’T reduce your Federal Income Tax if you don’t owe any taxes!

ADFA or any associate representing ADFA are not tax professionals and cannot give tax

advice. ADFA recommends that borrowers seek the advice of a qualified tax professional when

deciding whether or not to take advantage of an MCC. For more information regarding this

provision, please contact the IRS or a tax professional.

Note: ADFA will not reimburse MCC borrower’s that are required to pay the Recapture Tax.

Miscellaneous The information contained herein (including but not limited to any description of ADFA and its lending

programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to

change without notice.

(The information contained in this product description does not modify, replace or substitute infor-

mation in the Fannie Mae Selling and Desktop Underwriting Guides and or related release notes or

supplements. Always check for Fannie Mae, ServiSolutions or ADFA announcements and updates for

current underwriting guidelines, changes and/or updates).

“MORTGAGE CREDIT CERTIFICATE”“MORTGAGE CREDIT CERTIFICATE”

ADFA Mortgage Credit Certificate

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