PROGRAM GUIDELINES FOR FIXED RATE LOANS …

1 PROGRAM GUIDELINES FOR FIXED RATE LOANS with DOWN PAYMENT ASSISTANCE & MORTGAGE CREDIT CERTIFICATE programs Disclaimer: The Texas State Affordable Housing Corporation (TSAHC) provides these GUIDELINES as a service to our Participating Lenders. While TSAHC strives to make the information in these GUIDELINES as accurate as possible, we make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of the GUIDELINES . TSAHC expressly disclaims liability for errors and omissions in the contents of these GUIDELINES related to the eligibility and underwriting requirements of US Bank, Fannie Mae, FHA, USDA, and/or VA. For those requirements, Participating Lenders should rely on their agreements with, and GUIDELINES published by, the relevant entity.

2 TSAHC Homeownership programs GUIDELINES Page 1 Updated August 19, 2016 2015 2016 REVISIONS TABLE Section Page Revision Date 13 14 Minimum credit score for all conventional LOANS has been reduced to 640 8/19/2016. 11 Clarification on additional subsidy programs allowed to be used with TSAHC DPA 8/17/2016. 7 Occupying borrowers can now own other property with all loan types 8/17/2016. 1 Addition of GUIDELINES disclaimer on cover page 8/1/2016. 14 Change to delegated underwriting authority for LOANS with LTVs between 97% 7/20/2016. 8 Clarification on source of GUIDELINES for all loan types 7/20/2016. 12 Additional overlays for files that are manually underwritten 5/31/2016. FHA manual underwrite with no credit score allowed (will receive 2% less DPA) 5/31/2016.

3 13 FNMA HFA Preferred Conventional LOANS manual underwriting reintroduced 14 $500 MCC issuance fee (no longer 1% of loan amount) 4/1/2016. 12 FHA manual underwriting reintroduced (will receive 1% less in DPA) 4/1/2016. 7 Clarification on home buyer requirement for FNMA HFA Preferred Conventional LOANS 2/18/2016. 8 Home buyer education providers must be listed on Texas Financial Toolbox 12/1/2015. & 8 9 FHA Streamline Refinance option no longer available 12/1/2015. 9 Down Payment Assistance options revised (2% to 5% in NET DPA) 12/1/2015. 11 Clarification on qualifying residences 12/1/2015. Revised underwriting requirements for FHA LOANS 12/1/20145. 12 Manual underwriting no longer allowed 14 Funding fee will increase to $400 starting November 1, 2015 10/3/2015.

4 16 The term HUD 1 has been replaced with Closing Disclosure 10/3/2015. 14 Clarification on fees for borrowers utilizing both our DPA and MCC assistance. 3/12/15. 9 Addition of FHA Streamline Refinance loan to Types of LOANS 5/11/2015. 9 Addition of FHA Streamline Refinance to Purpose of loan 5/11/2015. 10 Addition of DPA Assistance for FHA Streamline Refinance LOANS 5/11/2015. 13 Additional credit overlays for manufactured homes and FHA Streamline Refinance LOANS 5/11/2015. 16 Lender compensation for FHA Streamline Refinance LOANS 5/11/2015. 6 DPA Assistance income limits apply to mortgagor's using a HFA Streamline loan 6/1/2015. 13 Mortgagor's income cannot exceed DPA PROGRAM limits for HFA Streamline LOANS 6/1/2015.

5 17 No Underwriter Certification Form required for HFA Streamline Refinance LOANS 6/1/2015. 18 DPA Funding Request Form required for HFA Streamline Refinance LOANS 6/1/2015. 19 FHA Streamline Refinance LOANS will be purchased by Bank for servicing 6/1/2015. TSAHC Homeownership programs GUIDELINES Page 2 TABLE OF CONTENTS SECTION 1 INTRODUCTION TO THE TSAHC HOMEOWNERSHIP programs .. 4 Forward .. 4 SECTION 2 MORTGAGOR ELIGIBILITY .. 4 Eligible Borrowers .. 4 Income Limitation .. 6 Homebuyer Requirement .. 7 Principal Residence Requirement .. 8 Residency Requirements .. 8 Homebuyer Education .. 8 SECTION 3 loan ELIGIBILITY .. 8 Types of LOANS .. 8 Purpose of loan .. 9 Assistance Options .. 9 Subsidy programs .. 11 SECTION 4 PROPERTY ELIGIBILITY.

6 11 Eligible loan Area .. 11 Qualifying Residences .. 11 Purchase Price or Appraised Value Limitation .. 12 Targeted Areas .. 12 SECTION 5 MORTGAGE loan UNDERWRITING AND PURCHASE .. 12 General Mortgage Underwriting .. 12 SECTION 6 PROGRAM FEES AND CHARGES .. 14 PROGRAM Fees .. 14 Mortgage loan Purchase Price and Lender Compensation .. 15 Fees & Charges Placement on the Closing Disclosure .. 15 SECTION 7 loan RESERVATION, COMPLIANCE & FUNDING PROCEDURES .. 16 Lender Portal .. 16 Reservation, Compliance and Closing Steps .. 16 Electronic Submission of Required 18 SECTION 8 MODIFICATIONS .. 19 Changes in Current Income .. 19 Change in Purchase Price .. 19 Changes in Property Address .. 20 Change in loan Amount .. 20 Lender's Obligation to TSAHC of Material Changes.

7 20 SECTION 9 ADDITIONAL PROVISIONS .. 20 Cancellation and Commitment Expirations .. 20 Delinquent Closing Documentation .. 21 Penalties for Borrower Misrepresentation .. 21 Revocations of MCC .. 21 TSAHC Homeownership programs GUIDELINES Page 3 Reissued MCCs .. 21 Replacement MCCs .. 22 SECTION 10 MCC REPORTING .. 22 Lender Record Keeping and Federal Report Filing .. 22 TSAHC Reports .. 22 APPENDIX B: MORTGAGE CREDIT CERTIFICATE INCOME GUIDELINES .. 23 SECTION 1 INTRODUCTION TO THE TSAHC HOMEOWNERSHIP programs Foreword The Texas State Affordable Housing Corporation (TSAHC) provides access to mortgage credit certificates (MCC) and FIXED rate mortgage LOANS that include down payment assistance grants (DPA) attached to the loan .

8 Both programs are available to teachers, veterans, police officers, corrections officers, fire fighters, and low to moderate income homebuyers through our Homes for Texas Heroes and Home Sweet Texas loan programs . TSAHC provides the online reservation and compliance system (Lender Portal) at where rates and funds are locked. TSAHC also provides the PROGRAM GUIDELINES , applicable forms and affidavits, and reviews compliance packages to ensure TSAHC's eligibility requirements are met. The PROGRAM GUIDELINES describe the current rules and requirements, outline the role of TSAHC, and set forth the requirements for lenders to participate. TSAHC may revise the GUIDELINES from time to time. The most current version can be found on TSAHC's website at and on the Lender Portal at SECTION 2 MORTGAGOR ELIGIBILITY Eligible Borrowers Eligible borrowers include Home Sweet Texas and Texas Heroes borrowers defined below.

9 Home Sweet Texas . A person who at the time of loan application and loan closing whose income is no greater than 80% of applicable median family income, by county, without adjustment for family size. Texas Hero . A person who at the time of loan application and loan closing is employed full time as a: Allied Health Faculty Member a full time member of the faculty of an undergraduate or graduate allied health PROGRAM of a public or private institution of higher education in the state. Corrections Officer all full time employees of the Texas Department of Criminal Justice (TDCJ) who receive hazardous duty pay. TSAHC Homeownership programs GUIDELINES Page 4 County Jailer a person employed full time as a county jail guard under Section , Local Government Code.

10 County jailers are licensed through the Texas Commission on Law Enforcement (TCOLE). Emergency Medical Services Personnel Per Section , Health and Safety Code, emergency medical services personnel are full time: emergency care attendant; emergency medical technicians; emergency medical technicians intermediate; emergency medical technicians paramedic; or licensed paramedic. Fire Fighter a member of a fire department who performs a function listed in Section (3)(c), Government Code. Permanent, full time fire department employees who are not secretaries, stenographers, clerks, budget analysts, or similar support staff persons or other administrative employees and who are assigned duties in one or more of the following categories: fire suppression; fire inspection; fire and arson investigation; marine firefighting; aircraft rescue and firefighting; fire training; fire education; fire administration; and Any other position necessarily or customarily related to fire prevention or suppression.