Are you a first time home buyer? Lender looking for down payment assistance? Are you having trouble paying your mortgage?

Down Payment and Closing Cost Program

The DCHA Down Payment and Closing Cost Loan Program is a gap financing program for income-eligible first time home buyers providing up to $12,000 per transaction in the form of a zero interest, deferred payment loan. Click here to see the income guidelines. Also note that pre-purchase education is required for Dane County funds to be available. Buyers can either take a DCHA First Time Home Buyer Course or another DCHA-approved program can be substituted as needed. The DCHA Program is available for purchases outside the city of Madison in Dane County.

A complete application includes standards documents from the Lender (see lender checklist at bottom of page), submittal of an application by the Borrower in the form of an Income and Asset Questionnaire along with other documents that can be accessed at the bottom of this page. Note two columns - one labeled Lender and the other Buyer. The fee to use the DCHA program is $30, which is the cost to record the mortgage with the Register of Deeds Office.

The DCHA program requires a Housing Quality Standard (HQS) inspection. HQS is FREE OF CHARGE and conducted by a licensed inspector hired by Dane County. Any home built before 1978 will be subject to lead paint requirements as part of HQS. DCHA strongly recommends taking the HQS checklist with you when shopping for homes so the expected level of housing quality is understood as you make decisions. The HQS checklist can be found here. The HQS is a pass/fail exercise. Any failed items must be fixed prior to closing or Dane County will not put funds in the transaction. Setting up escrow accounts to make repairs after closing is prohibited. Borrowers that choose to have third party inspections in addition to HQS are free to hire the inspector of their choice at their expense.

It is important that all parties including lender, buyer, buyer's agent, seller and seller's agent are aware of program requirements and timetable for processing requests. A minimum of 20 days from the date of receiving a complete package is required to process requests. An application package is considered complete and can be fully processed once there is an accepted Offer to Purchase.

Program Reminders

  1. As you are determining whether or not your borrower meets the DCHA Program Guidelines please review the Policy and Procedures document and program income guidelines.
  2. Have your borrower(s) register for the DCHA First Time Homebuyer Course, or a DCHA-approved program, as early in the process as possible. The sooner the education occurs the more informed the buyer. We also want to minimize undue burden on DCHA to meet transaction dates and deadlines.
  3. A Housing Quality Standard (HQS) inspection is required as part of the eligibility determination process. The program takes into account not only the financial profile of the applicant(s) and program income guidelines but also the quality of the property. HQS is a pass/fail exercise that is performed by a licensed home inspector. Any items that fail must be corrected prior to closing with the inspector making a follow up visit to sign off on the previously failed items. The program prohibits escrows for work to be done after closing. The HQS form is provided so that all parties are aware of the expectation of housing quality. If the property does not pass an HQS because of lead based paint issues there are specific requirements that have to be met before closing.  They are detailed here.

    Please note the most common HQS "fail" items.
  4. In an effort to stretch dollars and also take into account the funding sources proposed in the transaction lenders are required to complete a Gap Analysis Worksheet. The worksheet determines the level of funding available up to a maximum of $12,000. This worksheet must be submitted with the Lender Checklist.

Please contact Kate Nardi Sullivan at ksullivan@dcha.net or 608.224.3636 x28 for additional information or questions about the DCHA Program.

Lender Home Buyer

DCHA Down Payment and Closing Cost Program Guidelines

The Dane County Housing Authority (DCHA) First Time Homebuyer Down Payment and Closing Cost Program may be used to defray the entry costs of first time homeownership for income-eligible households outside the city of Madison.

Please note the following program procedures:

  • Step 1: Customer(s) register for the DCHA First Time Homebuyer Course. Course completion is required to receive program funds.
  • Step 2: Buyer receives lender pre-approval for financing from lender of choice.
  • Step 3. DCHA receives pre-approval letter and appropriate lender documents. See Lender Checklist.
  • Step 4: Buyer completes DCHA Homebuyer Application and schedules one-on-one counseling session with DCHA Homeownership Counselor. Note: Funding requests will be considered active once DCHA receives both Lender Checklist documents and Homebuyer Application.
  • Step 5: DCHA reviews Homebuyer Application together with Lender Checklist documents to determine buyer eligibility. Note: if lender documentation does not include third party income verifications DCHA sends out third parties.
  • Step 6: DCHA issues commitment letter with contingencies if necessary.
  • Step 7: DCHA coordinates with Dane County in the preparation of loan documents and completes inspection requirements. Note: third party inspections are required as is a DCHA Housing Quality Standard (HQS) inspection. HQS is free of charge.
  • Step 8: DCHA continues to receive documents from lender, title co., others as they become available.
  • Step 9: DCHA coordinates with title company agent receiving closing instructions, funds and loan documents.

Notes:
Processing time is approximately 20 days from the date of commitment. Every effort will be made to expedite processing time.
Other program dollars that can be stacked with DCHA funds include: FHLB Down Payment Plus, Movin’ Out, Realtors Foundation, Town of Madison and the City of Middleton.


DCHA Down Payment and Closing Cost Program Guidelines

Eligible Area:   Dane County outside the city of Madison
Contact Person: Kate Nardi Sullivan @ 224-3636 x28 or ksullivan@dcha.net
First Time Buyer: Applicants must be first time buyers defined as not having owned a home in the past three years, a single parent or displaced homemaker.
Income Eligibility: Gross household income from all sources may not exceed 80% of County Median Income adjusted for household size.
Maximum Loan: $223,250
Minimum Down Payment: One percent of the purchase price from the buyer’s own funds.
Eligible Property Types: Single family home, condominium or 1/2 duplex
Ratios: Total combined debt to income ratios cannot exceed 40 percent. However, if the borrowers income is adequate to complete the first mortgage transaction without DCHA funds, DCHA will not participate.
Asset Limits: No more than 12 months PITI including condo fees.
Loan Amount: Up to $12,000.
Eligible Costs: Down payment and/or closing costs standard to the industry such as appraisal, credit report, title insurance, settlement fees, other.
Home Buyer Education: Face to face homebuyer education is required. See course schedule to register customer(s).
Loan Conditions: The loan is deferred until such time borrower sells the property, terminates occupancy as the primary residence, or upon a cash-out refinance.
Home Inspections: Housing Quality Standard (HQS) Inspection conducted by DCHA inspector. Independent third party inspection performed by an inspector licensed in the state of WI.
Other Provisions: Interest rate no more than two percentage points more than the prevailing WHEDA rate. The maximum loan origination, points and/or funding fees may not exceed two percent of the loan amount. Pre-payment penalties are prohibited. Where possible, DCHA will be in 2nd position but will negotiate when there are multiple programs in the transaction.
Section 8 Homeownership Please refer customers who have Section 8 vouchers to DCHA unless he/she provides a Preliminary Statement of Commitment from DCHA.