Texas - First Time Home Buyer Assistance

[Austin Spitzenberger]

Good morning BP friends. I am currently looking to use an owner occupied loan to purchase a small multifamily (two-four plex). I have qualified for both 3.5% FHA and 5% conventional. I am aware of the benefits of each and understand how the loans differ. Here is my question.

For FHA. I am being told that the closing costs can be wrapped into a second mortgage in Texas via "first time home buyers assistance program" that is forgiven after a 3 year period. What does "forgiven" really mean? Can someone please explain?

Thanks in advance!

[Elise Marquette]

Hi Austin, typically when dealing with a FTBH program and "forgiveness" it just means that you don't have to pay it back after the three years have passed. If you were to sell or refinance within the 3 year period, you'd likely have to pay back either the full amount or a prorated amount. Be sure to check the interest rates between using the FTHB program and not using it- there's no such thing as free money and often times, I see the FTHB programs charging a higher interest rate than not using it. If it's a 3 year requirement, my guess would be that 3 years is the amount of time required for the program to make their money back (and then some!) off the higher interest rate being charged