Frequently Asked Questions for Equity Builder Program Homebuyers
Purchasing a home for the first time can be an overwhelming process. It’s important that as a homebuyer you ask the right questions and have reliable resources. You may also have questions after you purchase a home using an Equity Builder Program grant. Here are some frequently asked questions to help you.
What is the Equity Builder Program (EBP)?
The EBP provides down-payment, closing-cost, and rehabilitation assistance for an owner-occupied unit for households earning no more than 80% of the area median income. Through the EBP, grants are made to eligible borrowers when they close on mortgages with participating member financial institutions.
How do I apply?
FHLBank Boston is a wholesale bank made up of over 400 member financial institutions throughout the six New England states. Borrowers must apply for funding through an approved member financial institution and cannot apply directly.
What is the maximum amount I can receive in EBP funds?
Each year, FHLBank Boston determines the maximum amount based upon the percentage of our annual Affordable Housing Program (AHP) set-aside. It is important to ask the member financial institution you are working with what the maximum funds are per household. This amount can vary on a yearly basis.
Do I need to have a property selected for a member financial institution to submit my EBP enrollment?
Yes. A fully executed Purchase and Sales (P&S) Agreement signed by the homebuyer and seller with a property address is required. This is important because 80% of the area median income (AMI) is derived from a specific state, city or town. The grant funds are on a first-come, first-served basis which is why a property address and P&S are required.
How do I determine if I meet the 80% area median income threshold?
You will work with your institution to determine how this is calculated.
What documentation do I need to provide a member financial institution to submit my EBP enrollment?
It is important that you meet with a member to initiate a first mortgage loan application. You will be asked a series of questions about your gross monthly income and will need to provide documentation. EBP is an income-based grant program that is regulated by the Federal Housing Finance Agency (FHFA) and includes ALL income for ALL household members occupying the property. EBP has a disclosure form that needs to be completed by you and all members of the household who will occupy the property. The member will provide this document and review the information about EBP and the income-related questions.
If I use an EBP grant to buy a home and then decide to sell the home, do I have to repay the EBP grant funds?
EBP grants are forgivable after five years from the closing date of that primary residence. If you decide to sell the home prior to the five years, you may owe a repayment.*
If I use an EBP grant to buy a home and then decide to sell the home, who do I contact when I am selling my property?
You must contact the member financial institution that provided the first mortgage financing at the time of purchase. The member will contact FHLBank Boston’s housing and community investment staff to see if a repayment is needed.
If I’m a homeowner, how do you calculate or determine the repayment?
The amount owed is calculated by reducing the EBP grant on a pro rata basis per month for the period the home is owned, based on the original closing date and the current date of the transaction. Credit is given for the period that you owned the home. Repayment is due only for the remainder of the five-year retention period and only if the repayment amount is over $2,500.
What if my repayment due is over $2,500?
The Closing Disclosure will be compared from time of purchase to the current transaction to determine if any net proceeds from the sale are realized. The net proceeds calculation will include the household investment while residing in the home.
What do I do if I want to refinance my home?
You have the option to pay back the remaining grant funds or request a subordination. This is a forgivable grant after the five-year retention period expires. Depending on the circumstances, the best option is usually to subordinate the EBP grant to eliminate repayment but is up to the homeowner’s sole discretion.
What is a subordination?
This is a legal document that is executed on refinance transactions to change the order of the liens. It is completed when a property has more than one mortgage lien. The subordination moves the position of the EBP grant behind the first mortgage.
Who do I contact if I need a subordination?
You must contact the original member financial institution that provided financing for the property purchase even if you are obtaining refinancing from a different financial institution. The member will contact FHLBank Boston’s housing and community investment staff members to request a subordination approval.
*Repayment is referred to as a recapture or recapture calculation.