The Homebuyer Assistance Program (HAP) is a federal program that provides mortgage credit for eligible home buyers with little or no down payment. HAP helps home buyers cover closing costs for federally insured mortgages. Home buyers pay no points or private mortgage insurance. They can take out a loan with no money down and may be able to pay only a very small down payment.
The program is intended to reduce housing costs by providing mortgage credit to homeowners who have low or no down payments on their homes. Most HAP loans are used to purchase primary homes.
HAP was created by the National Housing Act of 1934. The Homebuyers Assistance for Renters, commonly known as HAP, is a popular program that helps people with low or no down payment make safe and affordable home purchases. If you want to know more about this program, please read on!
What does the program include?
Home buyers pay no interest during a time period of up to 30 years when they are purchasing a house with a mortgage insured by the Federal Housing Administration (FHA).
Homebuyers can use the proceeds of their FHA-insured mortgage for home improvements, such as a new roof or furnace, or they can contribute to their home as a down payment.
Homeowners pay mortgage insurance through a private mortgage insurance program that can cost less than 5% of the total amount of the mortgage.
Homebuyers also receive special tax benefits in many cases, such as lower taxes due to the difference in what a homebuyer owes on their taxes compared to what they owed at the time they bought the house.
The amount of income that a homebuyer and their spouse(s) can earn before they would be subject to certain income limitations that would apply if they were to be self-employed or their spouse was self-employed.
The Homebuyer Assistance Program also provides benefits for the home buyer’s dependents, who include the homebuyer’s spouse and unmarried children under the age of 18 who are living with the homebuyer.
Can I qualify?
Who can use HAP?
The home buyer can use the program if they have purchased a house that is eligible for FHA-insured loans. If your house is not eligible for HAP, there are other government-insured programs for you to consider.
FHA-insured loan limits
The total purchase price of the home for all FHA-insured loans you receive must not exceed the applicable maximum loan amount. To determine your maximum loan amount, please refer to this table:
Household Size (Persons)
Maximum Loan Amount
One-person
$271,650
Two-person
$381,000
Three-person
$491,500
Four-person
$601,250
FHA maximum mortgage limits are calculated based on your household size. The maximum loan amount is calculated by using the total purchase price of the home ($x), the number of residents (people) in the household ($y), the number of persons receiving an FHA-insured loan ($z), and the maximum loan limit for a person (loan amount=$max_loan_amount).
Your HAP-eligible home’s total purchase price cannot exceed the maximum loan limit.
The limit varies by loan type. The maximum loan limit for an FHA 203(b) home is $494,890. The maximum loan limit for a first-time buyer is $271,650.
The limit varies by loan type. The maximum loan limit for an FHA 203(b) home is $494,890. The maximum loan limit for a first-time buyer is $271,650.
There are two basic types of mortgages that FHA loans can be used for: fixed-rate and adjustable-rate. For more information about what these loans are and what they mean, click here.
Who doesn’t qualify?
The homebuyer does not qualify for the Homebuyer Assistance Program if:
The homebuyer’s household income exceeds the limits for the FHA-insured loan
The homebuyer does not have an FHA-insured mortgage on their home
Is there a credit check?
HAP credit checks are conducted for all applications. If the credit report is good, the mortgage company will decide if they wish to consider the applicant for HAP.
Applying for the Homebuyer Assistance Program
The Homebuyer Assistance Program (HAP) is a program that allows FHA mortgage insurance. It was created by the National Housing Act of 1934.
HAP is an attractive mortgage option for eligible home buyers. HAP requires a down payment of up to 3% of the home’s purchase price. For home buyers with a down payment of 5%, the maximum HAP loan amount is $271,650. HAP offers up to a 30-year fixed rate, with no points and no private mortgage insurance (PMI). If you need additional assistance to qualify for HAP, your lending team may be able to refer you to a loan officer with the following expertise: Hardship, Veterans, and Rural or Agricultural loans.
The Homebuyer Assistance Program helps homeowners by providing mortgage credit for eligible home buyers with little or no down payment. HAP is designed to help home buyers who may not be able to purchase a home with a down payment greater than 3%.
Home buyers can use HAP to pay for home improvements, as well as contribute to their home as a down payment. HAP allows qualified home buyers to spend HAP proceeds on home repairs, improvements, and even new appliances and furniture. HAP home buyers pay no interest for the duration of their loan period, as long as they remain current on their mortgage payments. After the loan term is over, HAP home buyers pay for their mortgage insurance payments, which is typically about 1% of the home’s purchase price. The remaining proceeds from the HAP home buyers’ mortgage insurance payments are allocated to their down payment and can be used for home improvements.
Home buyers who are unable to pay cash for a home can use HAP to supplement their purchase price by making a down payment.
How much money can I borrow?
The FHA-insured loan amount you can borrow is calculated by taking the total amount you want to borrow, adding 3% of that amount, and adding the lender’s fees and points, if applicable. (Points are the amount of interest that a mortgage lender collects from a home buyer at closing. They do not count toward your debt-to-income ratio).
The maximum loan amount, for all loan types, is $494,900 for single family home buyers and $471,000 for townhomes. The HAP maximum loan amount for a first-time buyer is $271,650.
The maximum loan amount varies by loan type. The maximum loan amount for an FHA 203(b) home is $494,900. The maximum loan amount for a first-time buyer is $271,650.
Can I qualify if I owe a lot of money on my mortgage?
Because you must have little or no money to put down on your home, you will need to work closely with your loan officer to determine if you qualify for HAP. Homebuyers with high mortgage balances may be able to qualify for an HAP loan. Some homebuyers who cannot put up 3% down will also be able to get an HAP loan. Contact your loan officer for more details on your loan options.
How does HAP work?
HAP is a mortgage program that can be used for primary residences in most cities in the United States. HAP loans are used for the down payment, with the rest of the funds used to pay for a home’s monthly mortgage payments.
Homebuyers can qualify for HAP if they meet certain requirements.
The purchase price of your home must be between $100,000 and $5,000,000
The home must be your primary residence
The total purchase price of the home for all FHA-insured loans you receive cannot exceed the applicable maximum loan amount. To determine your maximum loan amount, please refer to the table.
To see the maximum loan amount for your loan type, see the table above.
Loan limits vary by loan type. For the most part, you can qualify for the maximum loan limit that applies to your home type. However, you may need to consider other programs, such as the VA, to be able to afford the home that you would like to purchase. See: Veterans First Program.
You and your spouse can earn a combined total household income of up to $116,500 for the purchase of a home that does not exceed this amount. If you and your spouse make more than this amount, you will be subject to other limits based on your income. See: Income Limits for Self-Employed People.
The lender’s loan fee and points are built into the maximum loan amount, so the loan limit for your home type is $484,900 plus your lender’s loan fees and points.
Interest on HAP-eligible loans is limited to 12.5% on the portion of the loan not financed with private mortgage insurance. The total interest cost for the entire loan is limited to 30 percent of the maximum loan amount for that type of loan. For example, a first-time buyer in an FHA-insured loan would pay interest of up to 30% of the maximum loan amount in FHA-insured loans.
How is HAP funded?
HAP is funded by the FHA’s mortgage insurance. Homebuyers can expect to pay about 1% of the home’s purchase price for PMI.
For each month that a loan is being paid, a HAP mortgage insurance payment of 3% of the principal is paid to the FHA. The interest rate on HAP-eligible mortgages is limited to 12.5% on the amount not financed by PMI.
If a homebuyer makes monthly mortgage payments that total more than 12.5% of the loan’s principal balance, the excess will be paid to the FHA, which is built into the mortgage insurance premium. The total amount that a homebuyer will pay for the mortgage insurance premium is not more than 1% of the home’s purchase price.
The loan amount for which a homebuyer may qualify is calculated by adding 3% of the home’s purchase price to the maximum loan amount for the specific type of loan. For example, for an FHA-insured loan the maximum loan amount is $494,900. To calculate how much a homebuyer may borrow, use the following formula:
Maximum Loan Amount for Home Type + 3% x Home’s Purchase Price = Loan Amount that the Homebuyer may Qualify for.
Can I apply for HAP on the same day as the rest of the home loan?
HAP is only available to homebuyers who meet certain income, credit, and down payment requirements. Before you apply for HAP, you must first satisfy those requirements. Because HAP is only available to qualified homebuyers, your HAP application should not be considered an offer until the bank receives the required documentation.
The maximum HAP loan amount varies depending on the type of loan you get. Your lender will determine how much your HAP mortgage will be and calculate how much you may borrow under HAP. The maximum amount you can borrow is based on the mortgage’s loan type, your down payment, and other program requirements.
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