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How to qualify for WHEDA down payment assistance in Wisconsin


Saving up for a down payment on a home can be tough. But if you live in Wisconsin, there is help. The Wisconsin Housing and Economic Development Authority (WHEDA) offers down payment assistance programs to qualified home buyers in Wisconsin. If you qualify, you could pay less out of pocket when you buy your home.

In this blog, we’ll break down the down payment programs WHEDA offers, the benefits, how to qualify and apply, and how it works as you look for homes in Wisconsin.

What is WHEDA?

The Wisconsin Housing and Economic Development Authority (WHEDA) is an independent state authority who works closely with mortgage lenders and developers to stimulate the state’s economy and improve the quality of life through affordable housing and financial products. Many of their programs include home buyer-friendly mortgage programs in addition to down payment assistance (DPA).

Most state level down payment assistance programs work as a second mortgage or lien on your home for a number of years. Depending on your program, this second loan operates as a way to make sure you’re keeping your end of the bargain with the state by being a homeowner. If you move out, sell, or rent your property too quickly, the state will use the second mortgage to recoup their assistance and have you pay them back.

But how does the mortgage lender come into the mix?

Why can’t you directly apply to WHEDA for down payment assistance? WHEDA does not actually qualify you for your mortgage and help you close on your home. WHEDA provides down payment assistance to you through a mortgage lender who then qualifies you for a 30-year fixed mortgage program that fits WHEDA’s requirements. You must work with a WHEDA-approved lender.

Outside of the down payment assistance, the process of getting approved for a mortgage is entirely the same. You inquire, discuss your options, apply, get pre-approved, and buy. WHEDA will service your loan once funded.

WHEDA’s two down payment assistance programs.

WHEDA offers two down payment assistance programs as well as mortgage options you can qualify for. Before we get into that, let’s look at the two down payment assistance programs:

  • Easy Close Advantage - Down Payment Assistance: A program available as a second lien mortgage to help you cover your entire down payment. For conventional loans, this is a minimum of $3,000 or 3% (whichever is greater) in assistance. For FHA loans, it is a minimum of $3,000 or 3.5% (whichever is greater) in assistance. This is a 10-year loan paid at the same interest rate as your first mortgage.
  • Capital Access Advantage - Down Payment Assistance: A program available as a second lien mortgage to help you cover your entire down payment. For conventional loans, this is a minimum of $3,050 or 3% (whichever is greater) in assistance. For FHA loans, it’s a minimum of $3,050 or 3.5% (whichever is greater) in assistance. This second mortgage, however, will not add monthly payments. It is for 0% interest and is only paid off when you either sell the house or refinance. Currently, this is open to the first 425 individuals throughout the state of Wisconsin this year. Once those 425 slots have been funded, it will revert back to high need areas only.

Both programs can be used to purchase a single family home, two to four unit properties, condos, and manufactured homes throughout the entire state of Wisconsin. However, some areas may be eligible for additional assistance and higher purchase amounts.

In order to use these two programs, you’ll have to qualify for a mortgage. At NewCastle Home Loans, we offer FHA, conventional, and VA Loans in Wisconsin outside of the WHEDA programs. If you don’t qualify for or are not interested in the WHEDA mortgage options, you can still qualify for their down payment assistance programs.

However, if you are interested in WHEDA’s specific mortgage programs, here is an overview:

  • WHEDA Advantage Conventional - Home Loan offers a low-cost, 30-year fixed rate mortgage with higher income and loan limits. Income limits and credit guidelines apply, which you can review here. The property must be your primary residence, you must complete home buyer education classes, and there is no refinancing available.
  • Advantage Conventional HomeStyle Renovation offers borrowers the ability to buy and renovate a home with one mortgage. All renovation costs - including six months of mortgage payments if you’re unable to live in the home during the renovation - can be financed. You can get up to 100% financing and the renovation work must be completed six months after closing. In order to choose this program, you must qualify for a conventional WHEDA Advantage loan. Income and purchase price limits apply.
  • First Time Home Buyer (FTHB) Advantage offers a preferred fixed, interest rate below the standard conventional rate for qualified first-time home buyers purchasing in a federally designated target area. Borrowers must qualify for a conventional WHEDA Advantage loan and cannot have owned a principal place of residence in the last three years, unless the borrower is purchasing in a federally designated target area.
  • Veterans Affordable Loan Opportunity Rate (VALOR) offers an exclusive program for veterans with a reduced interest rate. The program has limited funds and is first come first serve. In order to qualify, you must be a veteran with an honorable discharge and qualify for a WHEDA Conventional Advantage loan. If you’re a first-time home buyer, you also must attend home buyer education classes.
  • WHEDA FHA Advantage - Home Loan offers low closing costs and a 30-year fixed interest rate with flexible underwriting. There are no minimum borrower contributions, which allows you to leverage fully gifted funds for a down payment. You must have a minimum of a two-year work history and sufficient income, a credit score of 620 or greater, complete home buyer education, and the property must be owner-occupied. The borrower can purchase an existing family home or HUD-approved HRAP warrantable condominium. Refinancing is not available.

Once we’ve confirmed that you’re qualified for the assistance, you’ll be able to have your entire down payment covered up to 3% for conventional loans and 3.5% for FHA loans.

How to qualify for WHEDA down payment assistance.

WHEDA’s DPA programs have Household Income Limits, which you can review here. This means that even if only one person in the household is applying for the loan, your lender will need to consider the income of every working adult over the age of 18 for the program. This person would be considered a “non-borrowing occupant.” This includes if you have children over the age of 18 who live with you and are working. Your mortgage lender, we won’t need to run their credit and do as much of an in-depth review, but they will need to make sure they understand how much each household member makes to see if your household qualifies.

As this limit varies with each county, we suggest you take a look at the Income Limits table provided by WHEDA to see if it applies to you. Regardless of the county, the smallest limit will be for the individual purchasing a single family residence (SFR). If you make less than $74,700, then you won’t be disqualified due to income.

See the table below for what information you mortgage lender will need to collect for income and what is and is not included as your income:

income-qualifying-for-WHEDA

In addition to home income limits, you’ll want to make sure your credit score is at least 620 or 640 - the two minimums are different depending on the WHEDA product. You’ll also want to make sure your total debt-to-income ratio (DTI) fits within the parameters as well. Generally, you’ll want your monthly debt-to-income to be under 45%, but occasionally with WHEDA Advantage Conventional, you can go slightly higher.

What’s the maximum approval amount for a WHEDA backed loan?

For conventional loans, you’ll only have to worry about $484,350 as of January 2019. For any of the other programs, you’ll need to consider whether or not you’re in a target area or what county you’ll be purchasing in. See the table below for specifics:

WHEDA limits by county

How to apply for WHEDA down payment assistance.

At NewCastle, we will be able to qualify you for your mortgage and WHEDA down payment assistance simultaneously. Remember - we offer other mortgage options if you don’t qualify for WHEDA. Below is a quick overview of the steps you’ll need to take to apply:

1. Apply online to get pre-approved for a mortgage. It’ll only take about 15 minutes. You need to do this first to see if you’ll qualify for one of their programs.

2. Consider the county or counties you’ll be purchasing in. Make sure your household income is within the limits.

3. Your Loan Officer will review your application and verify what you qualify for. This is a great opportunity to ask them any questions you have and learn about additional options. They will review your household income, credit score, and DTI.

4. You’re pre-approved! You know what you can afford, if you qualify, and how much down payment assistance you’ll receive. You take the down payment you can make + closing costs - WHEDA assistance = cash to close.

5. With your numbers and qualifications in order, start shopping for a home!

6. Time to close! Once we have your completed loan application with all supporting documentation and you are pre-approved, we can close within 15 days after we receive the fully executed sales contract. Keep in mind - our mortgage process is three times faster than the industry average. Our standards and efficiency will likely differ from other lenders.

There you have it! Ready to see if you qualify?

Wisconsin is welcoming you to their state, it’s time to come on home. Reach out to us in the chat below or give us a call directly at 855-610-1112 with any further questions. Hopefully, you’ll have a good understanding of how down payment assistance works with WHEDA and your lender. With the requirements above in mind, we’re happy to help you qualify for your new mortgage. Don’t worry if you’re outside of these limits, there are many more options that NewCastle Home Loans has to offer to help you keep your investment to a minimum.

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