Texas Government Code 2306.754 – Amount of Loan; Loan Terms
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(a) The department may establish the minimum amount of a loan under this subchapter, but a loan made by the department may not exceed $45,000.
(b) If it is not possible for an owner-builder to purchase necessary real property and build or rehabilitate adequate housing for $45,000, the owner-builder must obtain the amount necessary that exceeds $45,000 from other sources of funds.
Terms Used In Texas Government Code 2306.754
- Contract: A legal written agreement that becomes binding when signed.
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Fixed Rate: Having a "fixed" rate means that the APR doesn't change based on fluctuations of some external rate (such as the "Prime Rate"). In other words, a fixed rate is a rate that is not a variable rate. A fixed APR can change over time, in several circumstances:
- You are late making a payment or commit some other default, triggering an increase to a penalty rate
- The bank changes the terms of your account and you do not reject the change.
- The rate expires (if the rate was fixed for only a certain period of time).
- Lien: A claim against real or personal property in satisfaction of a debt.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Property: means real and personal property. See Texas Government Code 311.005
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
- Rule: includes regulation. See Texas Government Code 311.005
- Year: means 12 consecutive months. See Texas Government Code 311.005
(c) A loan made by the department under this subchapter:
(1) may not exceed a term of 30 years;
(2) may bear interest at a fixed rate of not more than three percent or bear interest in the following manner:
(A) no interest for the first two years of the loan;
(B) beginning with the second anniversary of the date the loan was made, interest at the rate of one percent a year;
(C) beginning on the third anniversary of the date the loan was made and ending on the sixth anniversary of the date the loan was made, interest at a rate that is one percent greater than the rate borne in the preceding year; and
(D) beginning on the sixth anniversary of the date the loan was made and continuing through the remainder of the loan term, interest at the rate of five percent; and
(3) shall be secured by:
(A) a first lien by the department on the real property if the loan is the largest amortized, repayable loan secured by the real property; or
(B) a co-first lien or subordinate lien as determined by department rule, if the loan is not the largest loan as described by Paragraph (A).
(d) If an owner-builder is purchasing real property under a contract for deed, the department may not disburse any portion of a loan made under this subchapter until the owner-builder:
(1) fully completes the owner-builder’s obligation under the contract and receives a deed to the property; or
(2) refinances the owner-builder’s obligation under the contract and converts the obligation to a note secured by a deed of trust.