MHDC Offers $15,000 Credit When Buying Foreclosures

Dawn Griffin Posted by
Mortgages and Loans Jun 2009

Mark AndersonThanks to Mark Anderson from Pulaski Bank for writing this post! Mark has been a great resource for me and my clients. If you have any further questions about this post or other financing options, please contact him directly. All his info is on his site.

The Missouri Housing and Development Commission, or MHDC, has an excellent new program for buyers purchasing foreclosed homes. First-time and repeat buyers will receive funds up to 20% of the foreclosed property’s sales price, with a maximum of $14,999. This amount can be applied to the purchaser’s down payment and closing costs. The money does come in the form of a 2nd mortgage (as opposed to being a grant), but the loan has 0% interest and is forgiven after 5 years of occupancy.

In order for buyers to qualify, the following conditions must be met:

  • In St. Louis City and County the total household income must fall at or below limits based on household size. For one person, the limit is $57,000. A family of two can earn up to $65,150 and still qualify. From there, you can add about $8,000 to this limit for each additional member of the household.
  • The buyer’s first mortgage must be an MHDC First Place Loan, which is an FHA 30-Year Fixed product at 6.0%. The interest rate is currently above normal FHA loans by about .5%, but the higher rate is almost undoubtedly worth it given the cash incentive.
  • The buyer must go through approved homebuyer education.
  • The purchase price for the foreclosed property must be discounted by at least 5% from the appraised value.
  • The buyer must live in the property as their primary residence.
  • If the foreclosed property was rented, it must have been clear of tenants for at least 12 months.

The best thing about this program is that first-time buyers can still take advantage of the $8,000 federal tax credit, for a total maximum benefit of over $22,000 for purchasing a foreclosed property. One thing to keep in mind is that MHDC has a limited pool of resources to fund this benefit – as compelling as it is, I suggest moving quickly!

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