Dan Green
Homebuyer.com
Dan Green (NMLS 227607) is a licensed mortgage professional who has helped millions of people achieve their American Dream of homeownership. Dan has developed dozens of tools, written thousands of mortgage articles, and recorded hundreds of educational videos. Read more about Dan Green.
This website discusses mortgage programs and how to qualify. Your eligibility may vary based on lender guidelines and investor overlays. Check with your lender for specific details.
Trusted Content
This article was checked for accuracy as of October 2, 2024. Learn more about our commitments to accuracy and your mortgage education in our editorial guidelines.
Updated: October 2, 2024
This article provides information about The Low-Income First-Time Homebuyers (LIFT) Act, a proposed bill that has not yet been passed into law. Please note that details are subject to change as the legislative process continues.
First-time home buyers may soon be eligible for a new low-downpayment mortgage with subsidized mortgage interest rates and no monthly mortgage insurance.
The program, called the Low-Income First-Time Homebuyers (LIFT) Act, is a bill first introduced in the 2021-2022 Congress. The current Congress then re-introduced the program as a bicameral bill on July 12, 2023, with two alternate names:
The LIFT Act aims “to establish a program to provide low- and moderate-income first-time, first-generation homebuyers with access to affordable and sustainable wealth-building home loans.”
It’s a “wealth-building home loan,” according to the bill, and the program is one of multiple first-time home buyer programs making their way through Congress.
This article explains how The LIFT Act works, which first-time buyers qualify, and when to expect the bill to pass into law.
Let’s go into the details.
The LIFT Act is a bill that creates a new, government-backed mortgage program for low- and moderate-income Americans.
The bill lowers mortgage rates, removes annual mortgage insurance premiums, and shortens an FHA loan term from 30 years to 20 years without changing its payment. The LIFT Act mortgage builds home equity faster, which generates more household wealth and protects home buyers from foreclosure.
The LIFT Act is a new first-time home buyer program type because it’s a mortgage loan.
It’s not a cash grant program like the $25,000 Downpayment Toward Equity bill, nor a tax credit like the $15,000 DASH Act or the First-Time Home Buyer Tax Credit.
The LIFT Act is the first congressional program that would accelerate mortgage payoffs. It changes the amount of principal and interest in each mortgage payment so homeowners get free-and-clear faster. LIFT Act mortgages generate wealth at twice the rate of a typical mortgage loan.
The bill calls for the LIFT Act program to end on December 31, 2025.
Check your eligibility and begin your application now.
The LIFT Act legislation modifies FHA mortgages to make them pay off faster. The bill’s language explains how the LIFT Act works.
The LIFT Act creates a union between the U.S. Treasury and the Department of Housing & Urban Development (HUD), which is the parent of the FHA.
In the partnership, the Treasury’s role is to purchase FHA-backed mortgages from mortgage lenders at below-market interest rates. HUD’s role is establishing rules and rates for the first-time buyer program.
The LIFT Act authorizes below-market interest rates for FHA loans to make a 20-year LIFT Act mortgage have the same payment as a 30-year FHA mortgage.
For example, here is a hypothetical $150,000 FHA mortgage that shows how the LIFT Act works:
LIFT Act mortgage rates are prescribed to make payments that are at least equal to, and not more than 10 percent above, the 30-year FHA mortgage counterpart.
LIFT Act interest rates can be 2 percentage points or more beneath the effective standard rate.
LIFT Act mortgages are self-insured and do require taxpayer money.
LIFT Act loans collect mortgage insurance premiums at closing like all FHA-backed loans. However, unlike standard FHA loans, an upfront mortgage insurance premium is the only premium eligible buyers will pay.
There is no MIP with a LIFT Act mortgage.
The FHA will finance four percent of the loan amount at closing into the loan size, and no additional mortgage insurance is due for the life of the loan.
The LIFT Act is not yet law, so when we discuss its eligibility requirements, note that the bill’s language is not final and may change before its passage into law.
As of December 30, 2024, the LIFT Act requires that home buyers meet the following requirements:
Home buyers must be purchasing their first home ever or have not owned a home in the last 36 months. If two or more people are co-applicants on the mortgage, every home buyer who will make their home their primary residence must be a first-time home buyer.
Eligible home buyers’ parents or legal guardians may not have owned a home during the 36 months before purchase. For buyers whose parents or guardians are no longer alive, the bill requires that parents and guardians did not own a home at their time of passing.
The parental / guardian requirements are waived for buyers who previously lived in foster care.
Home buyers living with a spouse or domestic partner who owned their primary residence within the last three years do not qualify as first-generation home buyers, whether the spouse or domestic partner is a co-borrower on the mortgage.
The LIFT Act is for single-unit homes only. Eligible home types include:
Manufactured and mobile homes may be eligible if the home is on a permanent foundation, is taxed as real estate, and built after June 15, 1976, among other FHA mortgage requirements.
Co-operative homes and 2-4 unit residential properties are ineligible.
Eligible home buyers must earn an income that’s at most 20 percent over the median income for their metropolitan area. For example, in Coral Gables, Florida, where the median income is $113,620, first-time home buyers must earn $136,350 per year or less to be LIFT Act-eligible.
The program makes income exceptions in high-cost areas, such as San Francisco, Denver, and other cities where the cost of living is high.
In high-cost areas, eligible home buyers must earn an income at most 40 percent above the area median income. In Orange County, California, the 2023 area median income is near $127,800. Therefore, home buyers must earn $179,000 annually or less to use the LIFT Act wealth-building mortgage.
The LIFT Act is based on FHA financing, so eligible first-time buyers must qualify for an FHA loan with their lender.
The minimum approval standards for an FHA mortgage include the following:
There are other FHA mortgage minimums, too.
As of December 30, 2024, the Low-Income First-Time Homebuyer (LIFT) Act of 2023 is still a bill with the 2023-2024 Congress. The bill replaces the Low-Income First-Time Homebuyer (LIFT) Act (S. 2797), which expired at the end of the last congressional session.
Sen. Mark Warner authored the current and former versions of The LIFT Act in the Senate. Rep. Emanuel Cleaver, II, wrote the bill’s current version in the House of Representatives.
The LIFT Act timeline is as follows:
Home buyers can only use a LIFT Act loan once the bill is enacted.
The LIFT Act is unlikely to pass into law before the late-2024 because the program requires the U.S. Treasury and HUD to coordinate, and both agencies are large and often slow-moving.
Once the bill passes, the Secretary of Housing & Urban Development must write the program rules and establish a LIFT HOME program, as described in the legislation.
The bill also requires rules for the Secretary of the Treasury.
The common questions we receive about the LIFT Act are from our website, emails, and YouTube comments.
The LIFT Act works by changing mortgage terms and interest rates. Therefore, it can’t be applied to a mortgage already in process.
No, the LIFT Act is for purchase mortgages only. Homeowners cannot use the LIFT Act to refinance an existing mortgage.
Yes, the LIFT Act is for FHA mortgages only. The bill language modifies how FHA loans are treated and does not mention other government-backed mortgages, including conventional, USDA, and VA mortgages.
The language of the LIFT Act bill states that both the home buyer and their spouse must meet the first-time home buyer guidelines.
The LIFT Act language states that co-borrowers are not considered for first-time home buyer status unless they also live in the home.
Wave goodbye to waiting times and say hello to our faster, better mortgage application. It's available anytime you are, 24/7/365. The power to approve your mortgage is just a click away.
NMLS #423065 Member FDIC. Equal Housing Lender.
Member FDIC. Equal Housing Lender.
Homebuyer.com
Operated by Novus Home Mortgage
230 Findlay Street
Cincinnati, OH 45214
513-824-8171
Notices
Mortgages
