Flagstar Bank is targeting low- to moderate-income borrowers with a mortgage offer that’s seemingly too good to be true.
The program, which Flagstar introduced earlier this week, requires no down payment from the borrower and also provides the borrower with closing cost assistance.
Under the program, Flagstar will gift the required 3% down payment to the borrower, plus up to $3,500 to be used for closing costs.
According to the bank, there is no obligation for borrowers who qualify to repay the down payment gift.
The program is available to only certain low- to moderate-income borrowers and borrowers in low- to moderate-income areas throughout Michigan.
The Detroit Free Press provides more info:
Borrowers would not have to repay the down payment or closing costs. But a 1099 form to report the income would be issued to the Internal Revenue Service by the bank. So the gifts could be taxable, depending on the borrower’s financial picture.
Flagstar said borrowers who might qualify for its new program typically would have an annual income in the range of $35,000 to $62,000. The sales price of the home -- which must be in qualifying areas -- would tend to be in the range of $80,000 to $175,000.
According to the Free Press article, the Flagstar program is available in 18 counties in Michigan, and could be used for certain homes in Detroit and Flint, along with other cities.
“Two of the biggest hurdles to homeownership are saving money for a down payment and then being able to afford the closing costs,” said Beverly Meek, Community Reinvestment Act director at Flagstar Bank. “This program takes on both head on and opens up opportunities to borrowers who may have thought they couldn’t afford to own a home.”
For more information on the program, click here or below.