Construction Loan Fund

The HB530 Construction Fund was established by the State of Mississippi in collaboration with the Mississippi Development Authority (MDA) and the Mississippi Home Corporation (MHC), to provide financing for the construction of affordable Single-Family Residential Housing Units within the state of Mississippi.

Eligible Borrowers:

Nonprofit Corporations, Partnerships, For-Profit Corporations, Public Housing Authorities, Planning and Development Districts, and Limited Equity Cooperatives. Individuals are not eligible.

 

Use of Funds:

Construction of new single-family residential housing units to be owner-occupied.

 

Program Priorities:

The following development types are given priority under the HB530 program:

  • Projects involving combination of nonprofit organizations with for-profit partners and investors.
  • Projects that empower lower income families through resident management, self-help housing, self-sufficiency activities designed to increase household incomes, or similar programs meeting critical housing needs.
  • Projects designed to access FNMA, FHLMC, FHA, or other secondary mortgage markets and requiring commitment of funds from the HB530 for two (2) years or less.
  • Projects that address the needs of the elderly.
  • Projects located in targeted counties or census tracts under the Mortgage Revenue Bond Program or in areas identified as “Difficult to Develop, Qualified Census Tracts, or Areas of Economic Distress” under the Housing Tax Credit Program.
  • Projects that provide for long-term affordability provisions of 15 years or more, enforced by deed of trust, deed restriction, restrictive covenant, or other methods to insure long-term affordability.

Loan Conditions:

Rate: Based on blended rate of all participants cost of funds
Term: Maximum term of two (2) years.
Income Restrictions: Families whose annual income is at or below $80,000 as defined by Smart Solution income limits.
Security: First lien only.
Recourse: Full recourse to builder/developer.
Prepayment: Loans may be prepaid at any time, with no prepayment penalties.
Assumability: Non-Assumable.

 

Loan Size:

For projects meeting the following criteria:

  • Total sales price not to exceed $235,000
  • Maximum loan to value of 80% of appraised value or $188,000 (the lesser of the two)
  • Special consideration of 90% loan to value may be considered on a case-by-case basis.
  • Maximum line of credit amount per Borrower is $750,000
  • Borrower shall have no more than six (6) Eligible Residential Housing Units

 

Fees:

All fees are NON-REFUNDABLE

  • Line of Credit Application Fee: $350.00
  • Loan Application Fee: $250.00 (per loan request)
  • Inspection Fees: $75.00 (Charges begin with the 4th inspection. Plus federal government mileage rate for all travel incurred and $35.00 per hour, after first 30 minutes on site)
  • Late fee as defined in Promissory Note.

Eligible Borrowers:

Nonprofit Corporations, Partnerships, For-Profit Corporations, Public Housing Authorities, Planning and Development Districts, and Limited Equity Cooperatives. Individuals are not eligible.

 

Use of Funds:

Construction of new single-family residential housing units to be owner-occupied.

 

Program Priorities:

  • The following development types are given priority under the HB530 program:
  • Projects involving combination of nonprofit organizations with for-profit partners and investors.
  • Projects that empower poor families through resident management, self-help housing, self-sufficiency activities designed to increase household incomes, or similar programs meeting critical housing needs.
  • Projects designed to access FNMA, FHLMC, FHA, or other secondary mortgage markets and requiring commitment of funds from the HB530 for two (2) years or less.
  • Projects that address the needs of the elderly.
  • Projects located in targeted counties or census tracts under the Mortgage Revenue Bond Program or in areas identified as “Difficult to Develop, Qualified Census Tracts, or Areas of
    Economic Distress” under the Housing Tax Credit Program.
  • Projects that provide for long-term affordability provisions of 15 years or more, enforced by deed of trust, deed restriction, restrictive covenant, or other methods to insure long-term affordability.

Builder Participation Incentives:

In accordance with legislation, MHC will act to originate loans to create decent, safe, and affordable housing for persons of low-to-moderate income. The interest rate savings created by the lower construction interest rate will be retained by the builder and will serve as both an incentive to build in areas that need decent, safe, and affordable housing and to offset market absorption risks that may be faced by the homebuilder. A restriction will be included on the construction loan that would provide assurances that persons of low-to-moderate income will be the ultimate purchasers of the newly constructed homes. These deed restrictions could be waived after a certain period of time of ownership, thereby allowing for adjustments in the home buying patterns in these particular communities.

Need Assistance?

For more information or questions about HB530 Construction Fund, contact

Charlotte Edwards

Vice President of Commercial Lending & Asset Management

601-718-4639.

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