Get Answers
As you go through the home buying process you'll have a lot of questions. And we have the answers.
Q: Do I have to be a first-time homebuyer to get a CDA loan?
A: The answer depends on where the borrower plans to purchase. Borrowers purchasing in Targeted Areas, do not have to be first-time homebuyers. However, borrowers purchasing in an area that is not designated as “Targeted” must meet the definition of a first-time homebuyer. A “first-time homebuyer” is defined as someone who has not owned a principal residence in the last three years. Q: What type of home can I purchase?
A: Eligible houses include townhouses, detached or semi-detached homes, and condominium units. Modular or manufactured homes that have the State seal of approval for code compliance may be financed.
Q: Do I have to occupy the house that I purchase with a CDA Loan?
A: Yes, CDA loans are available for owner-occupants only.
Q: How long does it take to get a loan with CDA?
A: CDA loans are processed and approved by approved lenders who are given incentives to complete the loan in a timely fashion. The 45-60 day time period normally written into the contract to purchase a home is more than enough time to receive an approval on a CDA loan.
Q: Does the seller have to pay points on a CDA loan?
A: The payment of the points is negotiable between the buyer and the seller.
Q: Is closing cost assistance available with a CDA loan?
Q: Are CDA loans only available in priority funding areas?
A: Only newly constructed homes are required to be in a priority funding area, not existing homes.
Q: How do I apply for a CDA loan?
A: CDA loans are available through a statewide network of participating lenders. To apply, contact a mortgage lender from list of approved lenders. Q: Do I need to have good credit to get a CDA loan?
A: Yes, acceptable credit is required. The CDA loan is underwritten to normal mortgage industry credit standards. A participating lender will be able to help you analyze your credit standing.
Q: What is the CDA loan interest rate?
A: CDA currently has six low-interest rate mortgage products:
- a zero-point product,
- a zero-point product with a 2% closing cost assistance grant,
- zero point product with a 3% closing costs assistance grant,
- one-point product,
- two-point product,
- three-point product.
The rates are frequently reviewed and subject to change. Consult with a lender for current CDA rates.
Q: Does the CDA loan program ever run out of money?
A: No, CDA funds are available continuously.
Q: Do I have to attend homeownership counseling?
A: Yes, CDA requires that all of our borrowers receive homebuyer education Homebuyer Workshops. Please note: If borrower is requesting a Downpayment and Settlement Expense Loan Program (DSELP) and/or assistance through a Partner Match Program loan on a property located in the City of Baltimore or the county of Anne Arundel, Baltimore, or Harford, the borrower must meet the applicable requirements on the Homebuyer Workshops sheet. Q: Will I have to pay recapture tax on my loan?
A: Federal law provides for a possible Recapture Tax when some homeowners sell their home within the first nine years after receiving a mortgage through the Community Development Administration’s (CDA) Maryland Mortgage Program. The recapture tax applies only if you meet both of the following conditions: (1) You sell or dispose of your home at a gain during the first nine years after the date you closed your mortgage loan; and (2) Your income at that time no longer allows you to qualify for this type of federal subsidy. However, in order to remove the confusion and worry about having to pay a recapture tax when the home is sold -- CDA agrees to reimburse any CDA homebuyer, who settles on their home on or after July 1, 2005, the amount of any recapture tax that the CDA homebuyer pays in connection with the sale of the home. |