Housing Kitsap
Home Home Ownership Program Frequently Asked Questions

Frequently Asked Questions

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What is Mutual Self-Help (MSH) housing and what does it mean to me?
The MSH housing program is about offering home ownership to first-time homebuyers with limited income in a very unique way. It does not waive the requirement for decent credit, stable income, and the ability and willingness to meet your future debt payments, including a home loan payment. In that way, it really is no different than the home loan that you might apply for just about anywhere else. However, there are two unique features that make it different, and for some, more attainable, than other home loans. Participation in the building of your and your neighbors' homes as part of a Building Group is required (no experience necessary) and is one of the unique features. Another unique feature has to do with your home loan payment. Your home loan payment is generally lower than other home loan payments as it is based on your income and not the current interest rate as determined by the market place. Some Building Group Members rates are as low as 1%; others may be at or near market rate. The lender in this case is the United States Department of Agriculture (USDA) - Rural Development. We will help you understand all about the home buying process while completing together a home loan package which we submit on your behalf to USDA. Before you close on your home loan, we begin 8 hours of training to familiarize you with the loan paperwork, accounting processes during construction of your home, and the construction process itself.

 



Who is Housing Kitsap?
We are a not-for-profit municipal corporation dedicated to helping income-eligible individuals and families find affordable housing, community services and home repair. We also develop and redevelop communities and urban areas. Since 1973, we have been responsible for the completion of over 1200 MSH homes. We even provide the MSH program in Mason county!

 



Do I have to have perfect credit?
Remember that just about everyone lending money will look at your credit report. Home loan lenders are no different and they look really hard! Decent credit is important to them and should be to you also, if you want to own your own home. Here are some of the USDA 502 loan parameters pertaining to credit:

  • All debts, including existing utilities, should be current and have a 12 month history of timely payments;
  • Child support payments must be current;
  • There should be no more than two payments over 30 days late within the last 12 months;
  • There can be no outstanding collections within the previous 6 months;
  • There can be no outstanding charge offs;
  • There can be no bankruptcy in the last 3 years without a 1-year payment plan with timely payments;
  • There can be no federal debt delinquency;
  • All judgments must be satisfied in full.


Exceptions to the above rules are sometimes granted for situations that arise which are outside of your control. These are granted on a case-by-case basis only.

 



What if my credit report indicates that I have not established any credit?
Home loan lenders like to know that you have shown an ability to meet your debt obligations. If you have no history of making monthly payments, as would be shown on your credit report, it is difficult for them to see that you will make your payments on time. Sometimes people make payments that do not show up on a credit report. You may pay rent, utility bills or insurance. Perhaps you have been putting a little money in savings each month, which is another form of payment. But with none of the above, no checking account, and no other type of credit, it can be very difficult for us to help you get your home loan.

 


 
How do I know if I am eligible for the program?
Your household may not earn more than 80% (see Income Criteria) of the county median income with certain adjustments. Prior to being placed on the MSH waitlist, we will review your application and make a preliminary determination of income eligibility based on the annual gross earnings (wages earned before taxes and other deductions) of everyone currently living in your household, minus $480 for each dependant, minus the cost of qualified childcare. If you are preliminarily eligible you will be placed on our MSH waitlist. Program eligibility DOES NOT guarantee home loan eligibility. That will be determined at the time you are contacted for a MSH build opportunity.


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When will I know it is my turn for an opportunity to be a Building Group Member?
Applicants are chosen from the waitlist for an opportunity to be in the next Building Group based on the date the application was received.

 



When will I know it is my turn for an opportunity to be a Building Group Member?
We pre-qualify all of our applicants at the time of application receipt. When we receive your application, we will call to confirm reciept. This begins the pre-qualification process. When your file has been reviewed, we wil either call for additional information, or walk you through the next steps based on your eligibility for the MSH waitlist. 

If you have questions, please email us at marketing@housingkitsap.org or call us at 360-535-6139. We are happy to answer questions.

 



So should I just wait for the phone to ring?
More thorough screening does not take place until we begin forming a building group. As a result, it is very difficult for us to be able to let you know if you will be in the next group in your area. The following items are a couple of things to keep in mind:

  • Although you may not qualify for a home now, you do not lose your place on the waitlist, because your original date of application stays the same. If there are some action items to take care of indicated by the pre-qualification call, your file will be greyed out when we print the waitlist for the next group. When you have completed those action items, let us know and we will re-pre-qualify you for the waitlist. In this case, we can update your file to print out the next time we pull the waitllist for a new build group.
  • You will not know if you definitely qualify for the program and for the USDA 502 Home Loan until your turn for a home build comes. We order and review your credit report after we receive your initial application and authorization for us to request your credit report. Applicants that appear to qualify for the program based on the results of the credit report will be placed on our MSH waitlist. Applicants on the MSH waitlist will be called for a home opportunity before applicants that are not preliminarily qualified for a home loan.
  • It is extremely important if you are on our waitlist and you have information that needs updating, for you to let us know. This just might be the information we need to move you to the Active waitlist. Remember, your original application date moves with you to the Active waitlist!

 

 



What about income and other requirements for a USDA 502 Home Loan?
First, you must qualify for the program, which requires that you do not make over a certain amount of income, after adjustments. When you meet program requirements and credit requirements, the next step regards debt-to-income ratios. A certain percentage of your gross income (before tax is taken out) may be used to make your house payment, including taxes and insurance (this is the housing payment ratio). Another percentage of your gross income may be used to make all your debt payments, including your new house payment, with taxes and insurance, plus any other debt, like minimum credit card payments, auto loan payments, etc. (this is your total debt ratio). As a general rule of thumb, your housing payment ratio should not exceed somewhere between 29% and 33% of your gross income, and your total debt ratio should not exceed 41% of your gross income.

 



How much cash out of pocket will I need?
Anticipate having a couple hundred dollars saved for a credit report, some basic tools, weather protection clothes, boots, etc. Prior to moving into your new home (after construction), you will need approximately $400 for your first year's homeowners insurance.

 



How much will my house payment be?
That is a tough question, because your interest rate (somewhere between 1% and market rate) is based on your income. In fact, as your income changes so may your interest rate, but never less than 1% and never more than the maximum rate at the time of your loan closing. Other variables include current land and building material costs. We aim to serve those who would not otherwise be able to afford to buy a house. We have helped over 1,200 families and individuals afford their brand new homes and we are focused on helping many more do the same!

 



May I pick the location of my house?
Housing Kitsap locates property where building group memberships of 8 to 12 may build their homes. It is often very difficult to find so many lots next to each other. If you know of potential building lots, please contact our office by email at Marketing@housingkitsap.org or phone at (360) 535-6139 so that we can look into it.

 



How long will it take to build my house and how much time will I be required to commit each week?
Generally you should anticipate 12 months of construction time. Each week, each Building Group household will be responsible for approximately 30 hours of productive labor. You will be able to use volunteers to help with some of those hours.

 



May I sell my MSH home?
You may sell your home at any time after you move in. You will not be able to get back into the program again for three years once you sell your home. If you sell your home, you will be required to pay back any down payment assistance funds and government subsidies that you have received.

 



Is the program for families and married couples only?
The Mutual Self-Help Program is for everyone that qualifies regardless of age (you must be eligible to purchase), sex, national origin, ethnicity, race, disability, religion, or marital status.

 



May I pick my house plan?
There are a number of house plans available. We try to accommodate the plan you select, but we must consider your budget and the lot size. Floorplans are selected based on first, resonable accomodations and second, in the order of build group members' original application dates.