OHCS staff recently confirmed with me that IRS rules allow non first time homebuyer veterans to use the OHCS bond program, so long as they have not previously purchased a home using ANY state (including Oregon's) home loan bond program or mortgage credit certificate.
This can combine the best of both programs: VA NO downpayment loans (with NO on going mortgage insurance expense) AND OHCS low rates: currently 3.25% "Rate Advantage" OR 4.25% (with 3% available for closing costs) "Cash Advantage".
While VA loans include a funding fee (which varies by loan to value and whether veteran was regular military or in national guard/reserves) that one time fee can be included in the mortgage amount AND is waived for veterans with a VA disability rating of 10% or more.
If a veteran has previously paid off a VA guaranteed loan they CAN get another VA home purchase loan--the VA funding fee is increased slightly for loans with less than 5% down.
OHCS loans do have income limits and OHCS maximum purchase prices MAY be below the $484,350 Oregon conforming loan limit that is used to determine the maximum zero down VA loan limit.
I have pasted a chart below that shows the qualifying income required for different purchase prices ranging from $275,000 to $475,000. Assumptions used are at the bottom of the chart.
Note that VA or OHCS loan limits by county may not permit the purchase prices shown or the income required could be above the OHCS county income limit.
For the Portland metro area the OHCS non targeted purchase price limit is $427,462 while the conforming limit of $484,350 statewide would prevent a VA zero down loan above that limit in any county. (For targeted areas the Portland metro OHCS purchase price limit is $522,554).
The Portland metro 1-2 person OHCS income limit for non targeted areas and 1-2 persons is $102,783 which is above the $97,136 required for a $475,000 home purchase.
One example from the chart. A Portland metro veteran with an income of $88,526 (in red in the chart), and $500 in monthly reoccurring debts could use a 4.25% OHCS Cash Advantage loan to purchase a home at $425,000. That purchase would require NO downpayment AND provide $12,750 to help pay for buyer closing costs.
- HMDA data shows 5,571 VA home purchase loans were made in Oregon in 2017; 1,661 loans were in the Portland metro area. (OHCS reports fewer than 10 veteran loans in last year). The 2017 Portland (Oregon) metro VA home buyer had a median income of $83,000.
- According to a recent ApartmentList report the home ownership rate for Post 9/11 veterans in Oregon was only 46% (vs a 62% overall Oregon homeownership rate).
- The most recent ACS data shows more than 291,000 veterans in Oregon, with more than 57,000 with VA disability ratings of 10% or more. [The VA funding fee is waived for veterans with a service connected disability of 10% or more].
- OHCS purchase price limits may be lower (or higher) than VA guarantee loan limits (map). The lower of the two limits would apply.
- VA loans have no income limits but downpayment requirements increase for loans above $484,350. OHCS recently published updated their 2019 income limits HERE.
- The City of Portland Mortgage Credit Certificate program uses the same IRS rules as OHCS, so the City of Portland MCC could also be used to help veterans buy homes in Portland, even if the veteran is NOT a first time hone buyer. (The MCC cannot be used in conjunction with the OHCS bond program, so the interest rate will be higher and any cash for closing costs would have to come from other sources). Portland has also yet to update their income limits, which could match those recently adopted by OHCS.
- VA loan underwriting includes a consideration of residual income not used by other loan programs. This insures the veteran has enough income remaining after paying for debt service, property and income taxes, reoccurring payments (car loans, student debt, etc), and housing related energy costs. DTI income ratios above 41% may require additional residual income above standard calculations. With more than 5,500 home purchase VA loans made in Oregon in 2017, many lenders are familiar with this VA loan underwriting requirement.
Originally created and posted on the Oregon Housing Blog.