The OHCS NextStep loan product provides first mortgage financing and down payment/closing cost assistance to eligible mortgagors. This product was created to help fulfill OHCS’ mission to provide housing opportunities to individuals and families with low to moderate incomes.
- The OHCS NextStep product provides first mortgage financing with a second mortgage OHCS DPA product.
- This product summary is a complement to and not a substitute for first mortgage product guidelines.
- First lien agency guidelines apply except as modified by this product summary for the purpose of this product only.
Housing Finance Agency / Product Sponsor
Oregon Housing and Community Services (OHCS)
EIN number: 93-0952117
Available Markets
Properties in Oregon
Eligible Lenders
Lenders must be approved by OHCS / Idaho Housing and Finance Association (IHFA) to participate in NexStep.
Interested lenders should contact OHCS at
HCS_homeownershiplending@hcs.oregon.gov.
Originating Lender
OHCS requires the loan originating staff (loan officers, loan officer assistants, processors) to be in Oregon or within 50 miles of the Oregon border.
Master Servicer and Compliance Agent
Product Administrator / Compliance Agent
Hilltop Securities Inc.
15301 Ventura Blvd., Bldg. B, Suite 410
Sherman Oaks, CA 91403
310-401-8052
Email:
OregonFlexLendingHelp@hilltopsecurities.com
Master Servicer
Idaho Housing and Finance Association
565 W. Myrtle St.
Boise, ID 83702
208-331-4700
Email:
HOL-shipping@ihfa.org
First Mortgage Products
Products - All 30-Year Fixed-Rate
Freddie Mac
- HFA Advantage up to 97% LTV
- CLTV not to exceed 105%
Fannie Mae
- HFA Preferred up to 97% LTV
- CLTV not to exceed 105%
The CLTV includes the combination of other repayable gifts, grants, community/affordable seconds, Individual Development Accounts (IDAs), and employer-assisted benefits. Please refer to Fannie Mae or Freddie Mac for the community/affordable seconds requirements.
Loan Purpose
Purchase money first mortgage lien with subordinate second mortgage lien (DPA) on primary owner-occupied residence.
Interest Rates / Loan Reservations
Hilltop Securities Inc. will post mortgage interest rates by 9 a.m. (PT) daily.
Current rates can be found on the following websites:
Sign up for email distribution for rates.
Announcements
The lock window will be available from 9 a.m. to 4 p.m. (PT), Monday through Friday, except for holidays and certain days when the financial markets are closed.
All loans must be delivered to and purchased by IHFA within 60 days of rate lock.
One-time extension may be purchased at the following rates:
Interest rate buydowns are
not available under the NextStep product.
Discount points are
not allowed under the NextStep product.
Interest credits are allowed up to seven days with a maximum amount of $1,000.
Homebuyer Education
- Homebuyer Education is required for all first-time homebuyers.
- Homebuyers must complete Homebuyer Education through an
OHCS homeownership center.
- Portland Housing Center is an accepted homeownership counseling center.
- Lender must retain a copy of the completion certificate for the course or counseling in the loan file.
- Homebuyer Education certificate good for up to one year.
If unable to coordinate class through a local homeownership center, borrowers may use the
"Finally Home" online homebuyer education class or
Framework Homebuyer Education by Neighborworks.
Down Payment Assistance
- The down payment/closing cost assistance is in the form of a second lien that is a forgivable or a repayable second lien.
- The assistance is based on the total loan amount (first lien amount plus any upfront MIP, funding fees, etc.).
- Income tier based on county.
- Qualifying income is used to determine the down payment assistance (DPA) income tier, which determines the loan term for the second mortgage.
Note: Certain options may not always be available depending on the market.
DPA funds may be used for up to 100% of the borrower’s cash requirement to close, including down payment, closing costs, pre-paid items, upfront borrower-paid mortgage insurance and other related mortgage loan fees and expenses.
The borrower may not receive cash back at close with exception to earnest mony deposit (EMD) and prepaid items.
Any unused DPA funds must be applied to the loan principal of the first mortgage. Principal reduction amount cannot exceed 1% of the loan amount.
Lenders fund the DPA at closing, on behalf of OHCS, and will be reimbursed the DPA assistance minus applicable fees upon purchase of the loan by Idaho Housing.
DPA/second lien must be recorded in second position behind the first mortgage.
Note: DPA may not be used to pay the difference between the sales price and appraised value if the sales price is higher (gap financing).
The
Focused Demographics Option offers 5% DPA for borrowers who meet the following criteria:
- NextStep program guidelines, and
- Two of the four criteria below:
- Household of four or more
- Household member with a disability
- Front-end ratio of 28% or higher
- Sole Head of Household with at least one eligible dependent living in the household (eligible dependents below):
- Under 18
- A household member with a disability
- Age 62 or older
Note: Household must include only one adult that is not an eligible dependent. All other household members must be eligible dependents.
Second Mortgage (DPA from previous section)
The
Forgivable Second Mortgage will be forgiven at the end of the loan term. The forgivable second mortgage is for borrowers whose AMI is ≤80%.
The
Repayable Second Mortgage has an interest rate 1% above the interest rate of the first mortgage for a term of 10, 20, or 30 years and is payable monthly beginning the first full month after closing.
Note: DPA/second lien must be recorded in second position behind the first mortgage.
Repayment
Any outstanding balance of the loan is repayable as follows:
-
Sale or Transfer: If all or any part of the property, or any interest in the property (including a beneficial interest), is sold, conveyed, or transferred, whether voluntary, involuntary or by operation of law.
-
Refinance or Payoff: Refinancing or paying off the first mortgage.
-
Rental of Property: If borrower rents or leases (whether by written or oral agreement) the property or any portion of the property.
-
Failure to Occupy Property as Principal Residence: If borrower fails to occupy the property as the borrower’s principal residence for a period of more than 60 days.
-
Default or Acceleration: Upon acceleration of the first or second loan for any reason.
There is no forgiveness for partial months.
Income Limits
- AMI tier/income limits are used to determine second program/DPA loan terms.
- Maximum income limit is $125,000 for loan products.
- The loan-qualifying income of the mortgagors must not exceed product income limits.
- Non-occupying co-borrowers’ income is included in the maximum income limit.
Lenders will be responsible for ensuring that the income meets product guidelines.
Household Income
Not applicable
Borrower Eligibility
- Borrower does
not have to be a first-time homebuyer.
- Determined by the first mortgage product selected.
- Non-occupying co-signers
are permitted.
- Non-occupying co-borrowers
are permitted.
- Borrowers may not own any residential property at the time of closing.
- Residency – follow agency guidelines.
Underwriting / Credit Score / Debt Ratio
Lenders are responsible for all credit underwriting decisions on all conventional mortgage loans originated under the program.
Mortgage loans must be underwritten to the standards of the applicable loan type.
Mortgage loans may be underwritten through an Automated Underwriting System (AUS), Fannie Mae’s Desktop Underwriter (DU), or Freddie Mac’s Loan Prospector (LP).
Freddie Mac HFA Advantage and Fannie Mac HFA Preferred Loans must meet the guidelines of the department’s servicer and applicable agency and all other guides listed in this summary.
Manual Underwriting
Manual underwriting is not allowed.
Interested Party Contributions
Follow agency guidelines.
Impounds
All loans require impounds regardless of LTV.
Property Types
Allowed:
- One-unit primary residence
- Condominiums
- Townhomes and planned unit developments (PUDs)
- Manufactured housing - includes single-, double- and multi-wide)
- Properties with accessory dwelling units (ADUs) may not be used as a rental; rental income is not allowed
- Leasehold properties
- Community land trust
Not Allowed:
- Co-ops
- Second homes and investment properties
- Two- to four-unit properties
Escrow Holdbacks
Allowed – see
Lender Notice 2025.04 for details. Follow all agency requirements.
Appraisal
A full interior/exterior appraisal is required and must comply with mortgage program appraisal guidelines.
AUS approval with appraisal waiver is acceptable.
Hazard/Flood Insurance
Hazard and flood insurance must comply with the requirements of the department’s servicer.
Maximum hazard deductible is $2,000. Maximum flood deductible is $5,000.
Title/Vesting
Vesting - Ownership vesting must be held by the eligible borrower, not in trust or in an LLC.
Non-borrowing spouse (NBS) is allowed on title with the following requirements met:
- Judgment / lien search for NBS on title report
- Evidence NBS does not currently have ownership in real estate.
Allowable Fees / Lender Compensation
In addition to the standard fees normally charged to the borrower and determined by the lender (i.e., Appraisal Fee, Credit Report Fee, Flood Certification, Underwriting, Document Preparation, etc.), the following fees should also be included.
- Origination charges are allowed according to agency guidelines.
- Please list fees in accordance with TRID guidelines on the LE/CD.
- The
Idaho Housing fees will be netted out of the loan purchase price.
- No fees are allowed to be charged on the second mortgage except for recording fees and interest, if applicable.
Service Release Premium – All Loans at Purchase - 1.25%
Compliance review fee should not be sent from title but rather netted back to lender for ACH payment through HilltopPay.
Mortgage Insurers (MI)
The following MI companies are approved:
- Arch
- Enact
- Essent
- MGIC
- National MI
- Radian
MI rates, pricing, and guidelines may differ among the participating MIs and are subject to change.
Lenders should consult the current housing finance agency MI guidelines at each MI company to determine the terms and conditions by which such loans will be insured.
These product guidelines do not supersede, nor are they a substitute for, the guidelines in place with each mortgage insurer at the time the loan is underwritten.
Mortgage Insurance / Coverage Amount
Payment Options - all LTVs:
- Borrower-paid – monthly with annual renewal
- Split premium
- Single premium
- The lender-paid mortgage insurance option is
not allowed.
- Financed MI is allowed; however, there is a gross LTV cap of 97%, which includes the financed MI amount.
MI Activation
- Lender is responsible for activating any MI policy and remitting any MI payments due to the mortgage insurer prior to the sale of the loan to Idaho Housing.
- The lender is also responsible for transferring the MI policy to IHFA after the loan sale.
MERS Assignments
- Lender
must use MERS (1009670) to register and assign the first and second mortgages to Idaho Housing.
- The notes for the first and second mortgages will be in the lender's name.
Loan Funding
At closing, lenders must fund the following in
their own name:
- First mortgage loans
- The DPA assistance on behalf of OHCS
Hilltop Securities Compliance Review
Pre-Closing
All loans must be compliance approved pre-closing to ensure the product criteria have been met, as well as post-closing compliance review of final executed documents.
Pre-Closing Checklist:
- The Checklist – Please review Section I for accuracy and notify product administrator of any changes.
- Executed Underwriter’s Certification Transmittal Form 1008 or 92900
- Applicable agency AUS findings
- Uniform Residential Loan Application (URLAs) - lender, borrower, and any addendums
- Fully executed Purchase Contract w/Addendums
- Homebuyer education course certification for all first-time homebuyers
- Other program specific-documents such as the second lien LE or Focused Worksheet, depending on the program chosen
- Pre-Closing Borrower’s Acknowledgment Form - signed. Only forms from the Lender Portal are accepted. Any other versions are prohibited.
Note: At closing, borrower will sign a final copy reaffirming their understanding of the terms.
Post-Closing
Post-Closing Checklist:
- The Checklist
- Executed final closing disclosures first lien and/or second lien (depending on the product)
- Executed final URLAs (lender, borrower, and any addendums)
For the following, only forms from the Lender Portal are accepted. Any other versions are prohibited.
- Executed Second Mortgage Subordinate Deed of Trust
-
Executed Second Mortgage Note
- Executed Legally Enforceable Obligation Letter
-
Executed Reaffirmation - Borrower’s Acknowledgement Form
Note:
Borrower is reaffirming their understanding of the terms.
-
Both HTS and IHFA files must be cleared and approved for loan purchase.
Loan Purchase and Servicing
Idaho Housing and Finance Association
Phone: 208-331-4700
Questions
If you have more questions, please contact: