- What is Mutual Self-Help (MSH) housing and what does it mean to me?
- Who is Kitsap County Consolidated Housing Authority (KCCHA)?
- Do I have to have perfect credit?
- What if my credit report indicates that I have not established any credit?
- What if my credit is not so good?
- How do I know if I am eligible for the program?
- When will I know it is my turn for an opportunity to be a Building Group Member?
- I would like to know if I qualify for the program and the home loan before a Building Group is being formed?
- So should I just wait for the phone to ring?
- What about income and other requirements for an USDA 502 Home Loan?
- How much cash out of pocket will I need?
- How much will my house payment be?
- May I pick the location of my house?
- How long will it take to build my house and how much time will I be required to commit?
- May I sell my MSH home?
- Is the program for families and married couples only?
- May I pick my house plan?
What is Mutual Self-Help (MSH) housing and what does it mean to me?
The MSH
housing program is about offering home ownership to first time homebuyers
with limited income in a very unique way. It does not waive the requirement
for good credit, stable income, and the ability and willingness to meet your
future debt payments including a home loan payment. In that way it really is
no different than the home loan that you might apply for just about anywhere
else. However there are two unique features that make it different, and for
some more attainable, than other home loans. Participation in the building
of your and your neighbor's homes as part of a Building Group Membership is
required (no building experience necessary) and is one of the unique
features. The other unique feature has to do with your home loan payment.
Your home loan payment is generally lower than other home loan payments as
it is based on your income and not the current interest rate as determined
by the market place! Some Building Group Members rates are as low as 1%;
others may be at or near market rate. The lender in this case is the United
States Department of Agriculture (USDA) Rural Housing Service. We will help
you understand all about the home buying process while asking your help
putting together a home loan package which we submit on your behalf to USDA.
Before you close on your home loan, we begin 12 hours of training to
familiarize you with the loan paperwork, accounting processes during
construction of your home, and the construction process itself.
Who is Kitsap County Consolidated Housing Authority (KCCHA)?
We are a
not-for-profit municipal corporation dedicated to helping income eligible
individuals and families find affordable housing, community services, and
home repair. We also develop and redevelop communities and urban areas.
Since 1973 we have been responsible for the completion of over 1200 MSH
homes. We even provide the MSH program in Jefferson and Mason counties!
Do I have to have perfect credit?
Remember
that just about everyone lending money these days will look at your credit
report. Home loan lenders are no different and in fact they look really
hard! Good credit is important to them and should be to you also, if you
want to own your own home. Here are some of the USDA 502 loan
parameters pertaining to credit:
·
All debts,
including existing utilities, should be current and have a history of timely
payments.
·
Child
support payments must be current.
·
There
should be no more than two payments over 30 days late within the last 12
months.
·
There can
be no outstanding collections within the previous 6 months.
·
There can
be no charge offs in the last 3 years.
·
There can
be no bankruptcy in the last 3 years.
·
There can
be no federal debt delinquency.
·
All
judgments must be satisfied in full.
What if my credit report indicates that I have not established any credit?
Home loan
lenders like to know, and USDA is no different, that you have shown an
ability to meet your debt obligations. If you have no history of making
monthly payments, as would be shown on your credit report, it is difficult
for them to get a feel for whether you will make your payments on time or
not. Sometimes people make payments that do not show up on a credit report.
You may pay rent, utility bills, or auto insurance. Perhaps you have been
putting a little money in savings each month, which is another form of
payment. But with none of the above, no checking account, and no other type
of credit, it can be very difficult for us to help you get your home loan,
even if you have good income! If this is the case, and you want to own your
own home, you should (at a minimum) begin renting a place. Open a checking
and savings account, and maybe even borrow a little money, but try very hard
to not borrow more than 2/3rds of the purchase price.
What if my credit is not so good?
Generally
there is no quick and easy fix to getting ahead of debt obligations when you
are behind. Budgeting is one very good way that has been proven to work. We
have HUD certified debt and credit counselors on staff at KCCHA. Give us a
call to take advantage of this free service. In the meantime you should
still apply and you will be put on the MSH waitlist. And that is good news
because by the time your income and credit meet the program and loan
qualifications you may already be at the front of the line!
How do I know if I am eligible for the program?
Your
household may not earn more than 80% (see
Income Criteria) of
the county median income with certain adjustments. Prior to being placed on
the MSH waitlist we will review your application and make a preliminary
determination of income eligibility based on the annual gross earnings
(wages earned before taxes and other deductions) of everyone currently
living in your household, minus $480 for each dependant, minus the cost of
qualified childcare. If you are preliminarily eligible you will be placed on
our MSH waitlist. Program eligibility does not
guarantee home loan eligibility. That will be determined at the time you are
contacted for a MSH home opportunity.
When will I know it is my turn for an opportunity to be a Building Group Member?
Applicants are chosen from the waitlist for an opportunity to be in the next Building Group based upon a number of criteria including: date application received, credit history, income, and desired building area.
I would like to know if I qualify for the program and the home loan before a Building Group is being formed?
As we have
a limited budget and staff, it is not possible to fully prequalify all of
our applicants. Much of
the information we provide in this document and on our website is based on
the questions we have received over the years. Most of the answers to your
questions can be found here and on our website, including:
·
Confirming
that you qualify for the program –
Income Criteria
·
When the
next group will be forming -
Homeownership
Opportunities
·
Applying
for a USDA home loan –
Self-Help Program Application
·
Credit
issues –
Frequently Asked Questions
·
Change in
your income and/or credit status -
Update My Wait List
File
So should I just wait for the phone to ring?
We do very
little screening at the time of application. Thorough screening does not
take place until we begin forming a building group. As a result, it is very
difficult for us to be able to let you know if you will be in the next group
in your area. The following items are a couple of things to keep in mind:
·
Although
you may not qualify for a home now (some of the time this is due to credit
history or too much debt), you do not lose your place on the waitlist. In
the meantime, it makes sense to budget hard and clean up any credit issues
because your original date of application stays the same. if you have a new
phone number, have moved, or for some reason have difficulty receiving your
mail, then you need to let us know ASAP (you may use this link on our
internet home page:
Update My Wait List File) so
that we can contact you when it is your turn to be part of a building group.
·
You will
not know if you definitely qualify for the program and for the USDA 502 Home
Loan until your turn for a home comes. We order and review your credit
report after we receive your initial application and authorization for us to
request your credit report. Applicants that appear to qualify for the
program based on the results of the credit report will be placed on our
Active waitlist. Applicants on the Active waitlist will be called for
a home opportunity before applicants that are not preliminarily qualified
for a home loan. Therefore, it is extremely important if you are on our
waitlist and you have information that is important and may help you better
qualify that you visit our website and click on
Update My Wait List File.
This just might be the information we need to move you to the Active
waitlist. And remember, your original application date moves with you to the
Active waitlist!
What about income and other requirements for an USDA 502 Home Loan?
First, you
must qualify for the program, which requires that you do not make too much
income, after adjustments, per our discussion above at
How do I
know if I am eligible for the program? When you meet program
requirements and credit requirements the next step has to do with debt to
income ratios. Which is lots of jargon for the simple fact that a certain
percentage of your gross income (before tax is taken out) may be used to
make your house payment including taxes and insurance (this is the housing
payment ratio). And another percentage of your gross income may be used to
make all your debt payments including your new house payment, with taxes and
insurance, plus any other debt like minimum credit card payments, auto loan
payments, etc. (this is your total debt ratio). As a general rule of
thumb your housing payment ratio should not exceed somewhere between 29% and
33% of your gross income and your total debt ratio should not exceed 41% of
your gross income.
How much cash out of pocket will I need?
Anticipate
having a couple hundred dollars saved for a credit report, some tools,
weather protection clothes, boots, etc.. Prior to moving into your new home
you will need an additional $400+/- for your first year’s homeowners
insurance.
How much will my house payment be?
That is a
tough question, because your interest rate (somewhere between 1% and market
rate) is based on your income. In fact as your income changes so may your
interest rate, but never less than 1% and never more than the maximum rate
at the time of your loan closing. Other variables include current land and
building material costs. We aim to serve those who would not otherwise be
able to afford to buy a house. We have helped over 1000 families and
individuals afford their brand new homes and we are focused on helping many
more do the same!
May I pick the location of my house?
KCCHA
locates property where building group memberships of 10 to 12 may build
their homes. It is often very difficult to find so many lots next to each
other. If you know of potential building lots, please contact our office by
email or phone so that we can look into it.
How long will it take to build my house and how much time will I be required to commit each week?
Generally you should anticipate 10 to 12 months
construction time. Each week each Building Group Member household will be
responsible for 30 hours of productive labor. You will be able to use
volunteers to help with some of those hours.
May I sell my MSH home?
You may sell your home at any time after occupancy. You will not be able to get back into the program again for three years once you sell your home. If you sell your home, you will be required to pay back any down payment assistance funds and government subsidies that you have received.
Is the program for families and married couples only?
The Mutual
Self-Help Program is for everyone that qualifies regardless of age (you must
be at least 18 years old), sex, national origin, ethnicity, race,
disability, religion, or marital status.
May I pick my house plan?
There are a number of house plans available. We try to accommodate the plan you select, but we must consider what you can afford, the lot size, and the size of your family.
This is an Equal Opportunity Program.
