Approved lenders can earn 2% - 3% on MSHDA loans:

1% origination fee from the borrower

1% DPA Premium (if MSHDA's Down Payment Assistance is used)

.75% Service Release Premium

.25% Loan Incentive Fee (if closing documents are received and purchased by MSHDA within 15 days of closing)

•  Lower-than-market interest rates.

•  Borrower applies at a MSHDA Participating Lender

•  Some borrowers may be eligible for homebuyer education

•  Eligible borrowers can apply for down payment assistance

Recapture tax requires some mortgagors to repay the federal government a portion of their gain upon the sale of the home within the first nine years if they financed their home with a Mortgage Revenue Bond (MRB) loan. This provision is regulated by the Internal Revenue Service (IRS). If any recapture tax is due, the mortgagor pays it to the IRS after selling the home. At the MSHDA loan closing, MSHDA provides a "Recapture Requirement" form showing the maximum recapture tax which could be due, if any.

In reality, most borrowers will not have to pay any recapture tax. For others, the amount will be minimal. In any case, the tax will never exceed one-half of the net gain on the sale of the home, or 6.25% of the original mortgage, whichever is less. To owe any recapture tax at all, you must sell your home within nine years, earn significantly more income than when you bought the home, and realize a gain from the sale. All three of these criteria must be met.

See the Reality of Recapture brochure for additional information.