F.A.Q. for NSP3 for Homebuyers Below 50% of Area Median Income
About the Program
The U.S. Department of Housing and Urban Development’s (HUD) Neighborhood Stabilization Program 3(NSP3) provides assistance to state and local governments to acquire and redevelop foreclosed properties that might otherwise become sources of abandonment and blight within their communities.
The Builders Development Corporation (BDC), a nonprofit 501c3 community development corporation, was named as Housing Specialist by the City of Raytown. The City of Raytown, as “lead city” for the three cities of Raytown, Grandview and Sugar Creek, has received approximately $1,125,000 in Neighborhood Stabilization Funds from the State of Missouri Department of Economic Development to acquire foreclosed residential real estate, vacant land, or blighted structures. After purchase, the Builders Development Corporation will either rehab the property, or build new homes on the parcel. Once completed, the properties will be sold to buyers who are eligible to participate in the Neighborhood Stabilization Program 3.
The Neighborhood Stabilization Program 3 will help individuals and families realize the dream of homeownership. Buyers may receive NSP3 funding in the form of a deferred second mortgage to assist with down payment, closing cost, and/or principal reduction associated with the purchase of the NSP home.
75% of the NSP3 funds are targeted to persons/families up to 120% of Area Median Income (AMI), and 25% of NSP3 funds are targeted to persons/families below 50% of AMI.
Below are some Frequently Asked Questions (FAQ) regarding the NSP:
Q. How do I know if I meet the income qualifications as below 50% of Area Median Income?
Q. What are the other eligibility qualifications?
Q. How much assistance is the NSP program providing?
Amount of potential assistance will be determined by need, sales price, and other factors but shall not exceed:
PLEASE NOTE: The above are general guidelines and the BDC reserves the right to change or modify these guidelines at any time. In no case shall the amount of first mortgage exceed 30% of gross income.
Q. What is the application process?
A. All prospective buyers must complete an NSP Application, and submit a non-refundable payment of $200 to the Builders Development Corporation. This payment is for the Income Qualification process, which is a required component of the program.
Q. Is this a grant or a loan?
Q. What is the affordability period?
A. The State of Missouri minimum affordability period is as follows:
Direct funds provided Minimum Affordability Period
$0 – $15,000 5 years
$15,001 – $40,000 10 years
$40,001 and over 15 years
Q. What happens at the end of the affordability period?
A. If all the terms of the Second Deed and Promissory Note are met, at the end of the affordability period the Deed will be automatically release. In other words, the loan becomes a grant once the affordability period is completed.
Q. Can I select a home and present it for participation in this program?
Q. Can I select my own real estate agent to assist me with the purchase of a NSP home?
Q. Where are the available homes located and how can I view a list of the inventory?
Q. Are “short sale” properties eligible for NSP assistance?
Q. Do I need good credit to participate in this program?
Q. Can a homebuyer use other assistance programs with the NSP Programs?
Q. What benefits are available to the buyer?
2. Extremely energy-efficient. New homes are built to Energy-Star Levels, which reduce the energy usage by a considerable amount resulting in lower utility bills. Rehabbed homes are also extremely energy-efficient, and like new homes, feature all new energy-efficient appliances, windows, heating and air conditioning units, and many other features.
Q. If I meet the eligibility qualifications, what do I do to participate in the program?
Q. Are all loan products acceptable for homebuyers?
A. No. If a loan product could be considered as “predatory”, the homebuyer would need to seek another financing option.
Q. What types of loan products are acceptable?
A. While there is not currently an “accepted lender list”, in general the BDC NSP Program will accept 30 year fixed loan products with interest rates at/near the current 30 year average. In addition, closing costs and other fees will be reviewed by BDC to ensure they provide a sound product for the buyer. The BDC reserves the right to reject any product deemed as predatory or otherwise unacceptable in order to protect the homebuyer.
Q. How do I get additional information on this program?