New construction loans can now be used to build houses, apartments, and condos in the United States, and the first wave of borrowers have been paying off.
The federal government will take out a $1.1 billion loan to finance new construction loans.
The Federal Housing Finance Agency (FHFA) announced the loan Thursday.
Construction loans, or construction loans as they are known in the industry, are loans that allow you to buy a home or apartment, but with a low down payment and with a fixed price.
That makes them less attractive for homebuyers who may have been deterred by the cost of a down payment.
The FHFA is providing a loan to fund the $1 billion, and it can only be used for projects that are built to the maximum of $150,000.
In 2019, the maximum amount of new construction loan loans is $400,000, but the FH FA says the government can also issue up to $1 million of new loan to eligible borrowers.
The loan will be available for the first three years, with the government gradually increasing the amount of money available.
New construction loan applicants must first meet the minimum down payment requirements, including an income of at least 60 percent of the median income for a family of four, and be able to afford the $300,000 down payment on the house or condo.
This means applicants must not only meet the mortgage payment requirements but also the cost requirements.
The mortgage payment must be in the range of 15 percent of adjusted gross income, and a 30-year fixed rate mortgage is allowed, plus another 15 percent to pay off the mortgage in case the home is sold.
The maximum down payment for the new construction credit is $100,000 and the maximum loan amount is $150 to $250,000 depending on income and down payment limits.
The borrower must provide a signed document from the builder outlining the financial situation and other requirements.
In order to qualify for the loan, applicants must also be in compliance with the terms of the FHA Home Affordable Modification program, which allows borrowers with moderate incomes to get a loan modification.
The credit can be used up to five years.
“The FHFCA will use these funds to ensure the financial stability of eligible borrowers and to build new housing for low- and moderate-income families,” the FHFFA said in a statement.
“New construction loan programs provide critical funding for housing programs and support affordable housing throughout the country, as well as programs that serve low-income communities.”
The FHA has not yet announced any restrictions on the amount a borrower can borrow, or on the repayment period.
The first wave includes developers who have been offering new construction projects for five years or less, as opposed to the typical 10 years.
But it also includes the most recent phase of the housing market that started with the recession.
The housing market is slowly picking up again, but in 2019, many projects remain unfinished.
A number of new projects are being constructed to serve the growing middle class, and more projects are scheduled for completion over the next two years.
A new construction tax credit is being introduced for new projects.
This is an increase to the tax credit for new construction of single-family homes and condos.
For example, a $250-million tax credit of $50,000 would be given to new projects in 2019 and the tax is capped at $100 million.
Another $150 million is available for projects built to a maximum of 300 square feet.