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

Because MSHDA loans are funded through the sale of tax-exempt bonds which benefits borrowers by lowering the loan interest rate, some borrowers are required to repay the government a portion of their gain upon the sale of their home within the first nine years.

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.

MSHDA recognized that this may be a concern for individuals, so the Recapture Tax Reimbursement Program was created. In the event a borrower is required to pay a recapture tax, MSHDA will reimburse borrowers for any recapture tax paid by the borrower to the IRS.  To request reimbursement, homeowners simply provide MSHDA with an IRS form 8828 and a signed copy of their IRS 1040 form.

See the Reality of Recapture for additional information.