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ADDI
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ADDI Frequently Asked Questions (FAQ) for Lenders What ratios are required for Madison American Dream approval? Is the ADDI loan FHA and FNMA approved? What ratios are required for Madison American Dream approval? The accepted combined housing and total debt-to-income ratio is 36%. An expanded combined ratio of 40% may be allowed with strong compensating factors such as good savings history, history of comparable rent expense, excellent credit history, good rent history, and stable employment. The Community Development Supervisor or designee will approve loan requests with a combined ratio below 30% on a case-by-case basis. Is the ADDI loan FHA and FNMA approved ? Yes, ADDI can be used with both first mortgage products.
What is the maximum loan to value? The total of the initial principal mortgage amount, the Madison American Dream Downpayment second mortgage and any other loans collateralized by the property, shall not exceed 100% loan to value based on the purchase price of the property or the appraised value, whichever amount is less. Does the Madison American Dream Initiative allow for Stacking of Funds? Combining funds from more than one down payment and closing cost loan program will be allowed; however, the Madison American Dream Downpayment loan must remain the second mortgage. These funds can be stacked with the City of Madison Home-Buy funds, DownPayment Plus, South Central Wisconsin Housing Foundation, and Movin' Out. Exceptions will be allowed for the Madison American Dream loan to be the third mortgage in the case of Inclusionary Zoning Units or when used in conjunction with other Community Development Office funds. What is the 2011 assistance limit? The Community Development assistance limit for 2011 is $54,000. What inspections are required to receive this funding? The homebuyer will be required to have a home inspection completed. The home must meet the City of Madison Minimum Housing and Property Maintenance Code requirements before Madison American Dream Downpayment assistance will be provided. The City of Madison contracted inspector will provide all inspections. For newly constructed properties, a certificate of occupancy will be accepted in lieu of a Madison Minimum Housing and Property Maintenance Code inspection. The Madison Minimum Housing and Property Maintenance Code inspection fee may be granted to the homebuyer through the Madison American Dream Program, depending on the loan amount. The inspection will be scheduled once it is determined that the homebuyer qualifies for the program. Lead-based paint inspection will be conducted on all homes built prior to 1978 in accordance with the Lead-Based Paint Poisoning Prevention Act 42 USC 3535 (d), 4821 and 4851, and its implementing regulations in 24 CFR 35, as well as State of Wisconsin Code HFS 163 and City of Madison MGO 7.49. The City of Madison contracted inspector will provide the lead-based paint inspection and clearance test for the property. The lead-based paint inspection and clearance testing fees may be granted to the homebuyer through the Madison American Dream Program, depending on the loan amount. The inspection will be scheduled once it is determined that the homebuyer qualifies for the program. The Madison American Dream Downpayment program will subordinate the second mortgage loan according to the terms of the Community Development Office Homeowner Loan Subordination Policy (see
Underwriting
Guidelines Are there Property Tax and Homeowner Insurance requirements? Homebuyers must escrow the property taxes and have homeowner insurance as a part of the first mortgage. How much time is required to process the loan? A minimum of fifteen business days is required to process a Madison American Dream Downpayment loan.
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