Wisconsin Homebuyer's Guide to WHEDA Subsidized Mortgage Programs 

Note: If you're looking for pre-approval, please go to Get Started Online.

WHEDA receives state and federal funding to subsidize extraordinary benefits for Wisconsin homebuyers. If you qualify, these benefits can help you in surprisingly generous ways.

 

WHEDA used to be available only to first-time homebuyers, but some of the programs are now open to repeat buyers.

As a WHEDA-approved lender, we work closely with WHEDA to deliver its benefits for Wisconsin homebuyers.*  WHEDA’s mission is to stimulate Wisconsin's economy and improve the quality of life for Wisconsin residents by making housing more accessible and affordable.

WHEDA involves eight different programs for homebuyers. You can contact me for more information about any of these programs. But if you'd like to start by exploring on your own, why don't we start with a shortcut to easily explore the options?

As a starting point, I will share with you the program that typically provides the biggest benefit. This is what I call the "highest impact" program. This will make everything easier because...

 

  • If you're eligible for this one, you can ignore several others because you're not allowed to combine some of them.  
     

  • If you're not eligible for this one, you can also ignore several others because they have the same requirements. So we can eliminate those. 

Either way, we can narrow down your options with this shortcut. My goal is to make things clear and easy to narrow down. So let's start with this shortcut...

Shortcut Step One: What is WHEDA's Highest Impact Program?

For most people, the most generous benefits come from the Mortgage Tax Credit Certificate. This is not a loan program but a special benefit that can potentially put a substantial amount of money back in your hands. You can use the tax credit certificate program with either WHEDA or non-WHEDA mortgages. This is the Wisconsin first-time homebuyer tax credit program.

How generous is the benefit? A typical buyer of a $200,000 property could end up with nearly $18,000 more in-hand over a ten year period through special tax credits.

If you use this program, you CANNOT use several other WHEDA programs. Some programs cannot be combined. But that's okay because this benefit tends to be the best.

We'll come back to this.

(By the way, you don't have to do this by yourself. If you're searching for a home within the next three months, your first step is to complete the information at Get Started Online. We'll help you explore and make it easy for you.)

Shortcut Step Two: Am I Eligible for the Highest Impact Program?

Here are two simple steps to figure out if you're likely eligible...

  1. ​The first step is to check out the WHEDA Income Caps categories in this PDF. The relevant section for this program is the turquoise-colored column. This column represents the "Lower Income Caps". 

    Notice, in the PDF, certain counties like Milwaukee and Waukesha involve two entries. One is marked with an * (asterisk). The extra section is for people buying in "target areas". The target areas have higher income caps. To see the target areas, click here
     

  2. If you fit within the Lower Income Caps, you may be eligible for this program. You also need answer "yes" to at least one of these questions...
     

  • Am I a First-Time Homebuyer? (Defined as someone who ​hasn't owned a primary residence within the last three years)
     

  • Am I a military veteran?
     

  • Am I buying within a target area?
     

For this program, the answer to any one of those questions needs to be "yes".

The answer can be "no" to two questions, but it needs to be "yes" to at least one.

 

If one answer is yes, congratulations! You may be eligible for this program.
 

If not, you won't be eligible for this program. You also won't be eligible for the other "Low Income Caps" programs. But you may be eligible for some of the other WHEDA loan programs (listed under the Mid-Income Caps programs).

By "eligible", we're speaking of the types of buyers this program works with. It also involves an underwriting process similar to most mortgages. Not everyone will qualify.

Again, we're here to help! Don't worry if you don't fully understanding everything. Just go to Get Started Online when you're ready to get started.

Shortcut Step Three: Skip to the Relevant WHEDA Programs 

One of these three points should apply to you...

  1. If you may be eligible for the "highest impact" program, skip ahead to the Mortgage Tax Credit Certificate program. Keep in mind this program cannot be combined with the other "Low Income Cap" programs. So you can likely just ignore those programs.

    You've already identified a phenomenal potential benefit, and that's enough to get in touch with us! You do not have to try to figure out everything out yourself. Get in touch through Get Started Online, and let us help you!
     

  2. If you're not eligible for the "highest impact program", but your income is below the caps in the green section of the Income Limits Chart, skip ahead to the Mid Income Cap Programs. Regardless of income, you will not be eligible for the Low Income Caps" programs because they involve the same requirements we already went through.
     

  3. If your income exceeds the Mid Income Caps, WHEDA won't help you. Instead, visit our Low Down Payment Options Guide

Now we can explore the WHEDA programs with a better "mental map". You can focus on reading about the relevant programs. If you want help with this, just go to Get Started Online.

Lower-Income Cap Program #1:
Mortgage Tax Credit Certificate (Highest Impact Program)

This is the program I've mentioned several times. This program is generally the biggest benefit offered by WHEDA. It's the top priority. The benefit of this program is amazingly generous!

It's only available under the Lower Income Caps, plus the extra factors described above (First-time buyer, Eligible Vet, or Target Area).

How does it work? It provides a significant tax credit. As I mentioned, this can put nearly $20,000 extra cash in hand for the typical buyer of a $200,000 home over a period of ten years through special tax credits.

 

In order to understand how this works, you need to know the difference between a tax credit vs. a tax deduction.

Tax credit vs. tax deduction

There's a big difference between a tax credit and a tax deduction. A tax deduction is simply an expense you deduct from your income. It lowers the amount of income on which you pay taxes. The amount it lowers your taxes is a fraction of the deduction. That's because tax is always a fraction of your income.

On the other hand, a tax credit is a direct, dollar-for-dollar tax benefit. For example, a $1,500 tax credit means you'll owe $1,500 less on taxes. If you would have otherwise received a $1,000 tax refund without the tax credit, it could mean you'll receive a $2,500 tax refund. 

Will this WHEDA tax credit help me?

This program is not right for everyone. The basic question is: do you pay Federal income taxes? For most mortgage applicants, the answer is yes. Just because you already receive a tax refund doesn't mean you don't pay Federal income taxes. A tax refund simply means you overpaid during the course of the year.

 

This question is important because a mortgage tax credit can reduce your tax liability all the way down to $0, but it can't go below $0. (In tax terms, it's a nonrefundable tax credit). If you already have $0 tax liability (which isn't very common for mortgage applicants), the tax certificate may not help you.

 

How is the tax credit calculated?

For most buyers with the Mortgage Tax Credit Certificate, the formula is this...

  • Interest paid within the year (x) 25% = Tax credit
    (Up to $2,000 max per year)

Example

 

Let's say you had an average mortgage balance of about $170,000. If you paid an interest rate of 5%, that means you would've paid roughly $8500 in interest that year.   (Note: the rate is simply a theoretical illustration).

 

Multiply that number by 25%. $8500 (x) 25% (=) $2,125.  

The maximum tax credit each year is $2,000. So you'd receive a tax credit of $2,000 that year. That usually means $2,000 back in your pocket at the end of the year. Each year, you'd go through a similar calculation.

That's just one year, but the tax credit continues after that. Imagine how much this could total over the life of the loan!

This is an ongoing, year-after-year, generous benefit, that few buyers even know about. It makes a huge lifetime impact. Not many homebuyers know about it. If you're not excited yet, please ask the nearest person to check your pulse! Or if you're getting too bored with all these details, let us help you! Just get started at Get Started Online.

 

I don't know any other program where a government program or grant program can have such a tremendous lifetime benefit for a typical homebuyer! This benefit far exceeds most grants that typically offer a much smaller one-time benefit at closing. This benefit is residual and ongoing over the life of your loan.

It also far exceeds the benefit of most other WHEDA programs for most buyers.

Note: Eligible military veterans receive a more favorable calculation. Instead of calculating the tax credit at a rate of 25% of mortgage interest, a military veteran receives a calculation of 40%.

How long does the benefit continue?

The best part about this program is the benefit continues year after year. It continues as long as you: (a) continue to occupy the home as your primary residence, and (b) keep the mortgage.

Why skip it?

While this benefit makes the biggest impact for most people, it's not for everybody.

By using this program, you CANNOT use any of the other "Low Income Cap" programs. 

By using this program, you also CANNOT use either down payment assistance program, which are types of a second mortgage. You can't use any second mortgage program.

Typically the only reasons to skip the Tax Credit Program are...

 

  1. If you need the down payment assistance;
     

  2. You already pay very little Federal income tax (under $700 total in annual Federal income taxes); or...
     

  3. You're in a rush to close and don't have time to wait for us to secure your approval through WHEDA.

If either of the first two reasons apply to you, check out the other "Low Income Caps" programs.

Note: It's even more important to get in touch early so we can get a head start if you plan to use a WHEDA program. Using WHEDA makes our VIP FasTrak program more important.

What mortgage programs can I combine with the tax certificate?

The tax credit certificate can be combined with:

 

  • The Mid-Income Cap programs.
    (Except for the Down Payment Assistance program)
     

  • Regular, Non-WHEDA mortgage loans 

We can help you explore these options.

What's My Next Step?

If you've already identified this potential benefit, let us help you. You can continue reading like a professional researcher, but it doesn't get much better than this! If you plan to use any WHEDA program, it requires more planning and preparation because it's a more involved process.

If you plan on purchasing within the next three months, continue to: Get Started Online. 

 

This is the first step for us to get to know you and identify relevant options to explore with you. Make sure you mention this WHEDA program when we talk.

Lower-Income Cap Program #2:
WHEDA Advantage First-Time Home Buyer Program 

As I explained earlier, you CANNOT combine this or any other "Lower Income Cap" program with the Mortgage Tax Credit Certificate program. So if you'd like to use the tax credit program, you can skip ahead to the "Mid Income Cap" programs.

However, if you're someone who won't receive maximal benefit from the tax credit program, let's consider the details of this program.​

Benefits

  • Low down payment for single family (3% down)

  • Low down payments for multi-family properties (5% for 2-4 units)

  • Down payment can come from Down Payment Assistance program

  • Can be combined with EITHER of WHEDA's Down Payment Assistance programs

  • Down payment can also come from a gift from family member

  • Discounted Private Mortgage Insurance

  • Preferable, slightly-discounted, subsidized rates

Requirements

  • You must be a First-Time Homebuyer. (Defined as someone who ​hasn't owned a primary residence within the last three years)

  • Minimum Credit Score of 620

  • Single family units up to 97% (3% down payment)

  • Must complete Home Buyer Education course 

  • Can NOT be combined with Mortgage Tax Credit Certificate

  • You must purchase property as your primary residence (same for all WHEDA programs)

  • Conservative debt-to-income ratio requirements

  • Subject to stricter loan limits ($253,809 for single family homes in most areas)

  • Must fit under Lower Income Caps

Lower-Income Cap Program #3:

WHEDA Advantage VALOR Program
For Eligible Military Veterans

Everything about this program is the same as the previous program -- except you can qualify as an eligible veteran instead of a first-time homebuyer. An eligible veteran is defined as someone with a DD214 showing honorable discharge.

Again, this program cannot be combined with the Mortgage Tax Credit Certificate program. Make sure you check out that program because it's preferable for most people.

Lower-Income Cap Program #4:

Capital Access Down Payment Assistance (DPA)

This program provides a loan up to $3,500 at 0% that can be applied to down payment and/or closing costs. No payments are required on the loan until you pay off the first mortgage (typically when you sell the home).

You should compare it with WHEDA's other Down Payment Assistance (DPA) program, Easy Close DPA. Easy Close DPA is available in more areas and can provide more money. 

Benefits

  • Up to $3,500 down payment assistance

  • 0% interest rate

  • No payments required until your first mortgage is paid off

  • Very minimal costs ($30 to record this small mortgage at the county)

Requirements

  • **Property must be in a "high housing need area" (contrast with Easy Close DPA)**

  • ** As of May 2018, the above requirement is temporarily waived. May change any time without notice. **

  • Must fit under Lower Income Caps

  • Must be used in conjunction with any WHEDA first mortgage

Note: neither DPA program can be combined with the Mortgage Tax Credit Certificate.

 

WHEDA Mid Income Cap Programs

The Mid Income Caps are represented in the middle column (green section) of this PDF.

Even if your income is under the Lower Income Caps, you can also check out the Mid Income Cap programs.

 

Why would you want to do this? Two reasons...

 

First, you may prefer the Down Payment Assistance (DPA) program under Mid Income Caps. It provides more funds, and it's available entirely throughout Wisconsin.

 

Secondly, if you get the Mortgage Tax Credit Certificate, cannot combine it with the Low Income Cap programs. However, you can combine it with any of the Mid Income Cap programs (except the DPA program).
 

So, let's move on to the Mid Income Cap programs....

Mid-Income Cap Program #1:
WHEDA Advantage Conventional Program 

This program features low closing costs, low down payments, low monthly mortgage payment, and a 30-year fixed interest rate. It can be combined with another program, Easy Close DPA, to cover down payment and closing costs. It is open to repeat homebuyers.

You do not have to be a first-time homebuyer to use a WHEDA Advantage loan. This program is open to first-time AND repeat homebuyers.
 

Benefits

  • Low cost, 30-year fixed interest rate

  • Low minimum down payment (3%) for single family properties

  • Low minimum down payment (5%) for multi-family properties (2-4 units)

  • Down payment can come from Easy Close DPA program

  • Down payment can also come from gift from family member

  • Higher income limits enable more borrowers to qualify

  • Serviced in-state (after your closing) by WHEDA's specialized servicing team

  • No minimum borrower contribution allows you to leverage fully gifted funds for down payment

  • Higher loan limits than Lower-Income Caps programs

  • No first time home buyer requirement (repeat buyers CAN buy)
     

General requirements

  • Borrower must have a minimum of a two-year work history and have sufficient income to support a monthly mortgage payment plus their other debt payments 

  • Home buyer education is required 

  • Property must be owner occupied (same with all WHEDA programs)

  • Several limitations on condos

  • Refinancing is not available

  • If purchasing a multi-family property (2-4 units), Landlord education is required. Also must contribute minimum 3% of your own funds

  • Any 2-4 unit property must be at least 5 years old

  • Minimum 620 credit score will enable more borrowers to qualify

  • Conventional loan limit of $453,100

  • Must fit under Mid Income Caps (middle column, green section)

Mid-Income Cap Program #2:
WHEDA Advantage FHA Program 

This program features flexible underwriting, low closing costs, low down payments, and a 30-year fixed interest rate. It can be combined with Easy Close DPA to cover down payment and closing costs.

Benefits

  • Low cost, 30-year fixed interest rate

  • No minimum borrower contribution allows you to leverage fully gifted funds for down payment

  • Minimum 620 credit score will enable more borrowers to qualify

  • Mortgage is assumable allowing a future buyer to take advantage of a 30-year fixed rate and lower closing costs

  • Flexible underwriting makes it easier to qualify and purchase your home sooner

  • No first-time home buyer requirement (repeat buyers can buy)

General requirements

  • Borrower must have a minimum of a two-year work history and have sufficient income to support a monthly mortgage payment plus their other debt payments 

  • Home buyer education is required 

  • Property must be owner occupied

  • Several limitations on condos

  • 2-unit (duplex) properties must be at least 5 years old

  • No 3-4 units on WHEDA Advantage FHA (but see Advantage Conventional)

  • Maximum debt-to-income ratio of 45%

  • Duplex purchase requires landlord training

  • Must fit under Mid Income Caps

Mid Income Cap Program #3:
Easy Close Down Payment Assistance (DPA) 

This program provides a low-cost second mortgage that can cover down payment and/or closing costs. By combining this program with one of the previous first-mortgage programs, it's possible to receive financing with no down payment! 

Benefits

  • Higher loan amounts possible than WHEDA's other DPA program

  • Loan up to 3% of purchase price if combined with WHEDA Conventional

  • Loan up to 3.5% of purchase price if combined with WHEDA FHA

  • Interest rate is same as first mortgage rate 

  • Can be used statewide (unlike WHEDA's Capital Access DPA)

  • A low-cost, fixed interest rate for 10 years

  • 10-year repayment makes payments affordable

  • Immediate access to loan funds at the time of closing. You qualify for the Easy Close Advantage at the same time you qualify for a WHEDA Advantage mortgage, making the process quick and easy.

  • Free access to educational resources. You can access homebuyer education and credit counseling from WHEDA’s trusted network of partners.

General requirements

  • Total financing (between first and second mortgage) may not exceed 105% of purchase price

  • Must be used in conjunction with WHEDA Advantage first mortgage

  • No income caps beyond what was used for the first mortgage

  • Payment must fit within acceptable debt-to-income ratio

  • May NOT be combined with Mortgage Tax Credit Certificate

  • Must fit under Mid Income Caps

2018 Pilot Program:
Milwaukee Advantage Rehab Program 
 

This is a NEW pilot mortgage product to expand home ownership in six Milwaukee neighborhoods: Clarke Square, Garden Homes, Josey Heights, Near West Side, Riverwest and Walnut Circle. It can be used to acquire and rehabilitate a property in these neighborhoods. Extra funds are provided for rehabilitation and improvements. Due to its limited reach, I will simply say this: If you're interested in this program, contact us.

WHEDA Mortgage Rates & What to Compare

While the rates are important, and it's true WHEDA offers some very special pricing, the more important questions are along the lines, "What programs are the right fit for me, and how can I maximize the benefits?"

Why is this? If you were only focused on rates, for example, you could easily overlook the tax certificate program which can save most people many times the amount they can save through a discounted rate.
 

This process is too important to lead off with a very narrow question. At this stage, it will help you to ask open-ended questions to find the maximum benefits. The particular details are clearly important. We'll help you explore and contrast details side-by-side.

But let's start off together by exploring ways to maximize your benefits. Once we identify the most suitable combination of programs for you, we can compare the full picture of details through a special comparison tool we provide called a Total Cost Analysis. This makes it easier to compare your options visually and side-by-side.

 

To get started, use our Get Started Online portal. This will tell us important about you so that we can start off on the right foot and help you more effectively.

Looks Like there are Abundant Options! What's My Next Step!?

 

If you'd like to be considered for a WHEDA program, it's even more important that you get in touch early. We can help you explore your options. As with any government subsidy, there is significantly more paperwork, and the process can take longer. So please do not wait until the last minute to raise interest in one of these programs. It's best if you can get in touch well before you find a home. 

  • If you'd like to purchase a home within the next three months, what are you waiting for? The clock is ticking, and we should already be in touch. Please proceed immediately to our Get Started Online page. This is the first step for us to get to know you. When we get in touch, please be sure to specifically point out your interest in our WHEDA programs.
     

  • If you plan to purchase a home sometime beyond three months in the future, use the contact form below. We'll get in touch to plan an informal, free phone consultation at our mutual convenience. This will help you plan and prepare for the future. It will definitely make a difference for you.

I'm beyond three months away from a home purchase. But please get in touch to help me plan and prepare!

I'm beyond three months away from a home purchase. But please get in touch to help me plan and prepare!

* This does not imply endorsement by WHEDA.

Greg Schliesmann
Branch Manager, NMLS# 234288
Cherry Creek Mortgage Co., Inc

Greg Schliesmann
Branch Manager, NMLS# 234288
Cherry Creek Mortgage Co., Inc

1033 N Mayfair Rd, Suite 100
Wauwatosa, WI 53226

Tel: 414-617-1756

1033 N Mayfair Rd, Suite 100
Wauwatosa, WI 53226

Tel: 414-617-1756

Free Access to Greg's Valuable Video Series

Five Strategies to Stand Out from Homebuyer Competition and Get Your Offer Accepted!

Free Access to Greg's Valuable Video Series

Five Strategies to Stand Out from Homebuyer Competition and Get Your Offer Accepted!


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Cherry Creek Mortgage Co., Inc. NMLS #3001. All Rights Reserved. Some loan products may not be available in all states. Terms, rates, and fees subject to change. Please speak with one of our loan originators for more detail.