Frequently Asked Questions
How do I apply for this loan?
The first step is to complete the employee affidavit form certifying that this is the first home you are seeking to purchase within forty miles of campus. The treasurer’s office will confirm eligibility and connect you to a loan officer at the participating bank of the employee’s choosing. After an offer on a property has been accepted, the participating bank will notify the treasurer’s office once the primary mortgage on a property has been approved.
Why is the College offering this program now?
A number of factors, including a severe housing shortage in Maine and higher mortgage rates, have combined to make the local real estate environment extremely challenging for first-time home buyers.
Who is considered a first-time home buyer as it relates to the policy?
An employee alone or an employee together with their spouse or domestic partner either of whom have not previously owned a primary residence within forty (40) miles of Bowdoin’s Brunswick campus within the past five (5) years.
I recently closed on a home in the area. Can this loan be awarded retroactively?
Unfortunately, no. In this case, the loan program is limited to property closings occurring between March 1, 2024 and February 28, 2026.
Will the program be renewed after two years?
The College will reassess market conditions and review the success of the forgivable loan program as we approach its two-year anniversary, but we do not anticipate that the program will extend beyond February 2026.
Is there any advantage to using Bath Savings vs. Kennebec Savings for mortgage financing in connection with this program?
Faculty and staff should perform their own research on the mortgage rates and programs offered by each bank for their primary mortgage financing before making a choice. With respect to the forgivable loan, the loan terms and rates are identical regardless of which participating bank is chosen.
What types of homes qualify?
The home must be a single-family residence, a townhouse/condominium, or a mobile home that is permanently affixed to land owned by the employee. The home must be the primary residence of the employee, it must remain employee-occupied, and the title may only be held in the name of the employee or jointly by the employee and the employee’s spouse/domestic partner.
Can I use any bank to obtain mortgage financing?
No, to qualify for the College’s forgivable loan program, you must use one of the participating banks who have agreed to process these loans — Bath Savings or Kennebec Savings Bank—for the primary mortgage.
Is the Bowdoin loan paid to me or to the seller of the property?
The Bowdoin loan will be paid directly to the seller—not to the employee—after the College receives confirmation from one of the two participating banks that the employee’s primary mortgage application has been approved.
Is the forgiven principal and interest of the Bowdoin loan taxable to me?
Yes. The forgiven principal and interest of the loan are considered taxable amounts received by the employee. These amounts are reported on the employee’s W-2 as taxable wages (or income) and are reported annually during the term of the loan. An employee may elect to have extra tax withheld from their paychecks and should seek advice from their own tax advisor.
What is the interest rate for the forgivable loan?
The interest rate for the forgivable loan will be offered at a fixed rate based upon the long term Applicable Federal Rate as published by the IRS for the month and year in which the property closing will be held.
What happens to the loan if I leave the College either voluntarily or involuntarily?
If your employment terminates for any reason or your employment status changes and you are no longer employed in a benefits-eligible position at the College, the outstanding loan principal and related interest will no longer be forgiven. The participating bank will bill the employee monthly for what remains of the original ten-year loan term, as of the employee’s eligibility status change or upon the employee’s separation date.
What happens if I sell my home after receiving the forgivable loan?
If the home is transferred or sold before the loan is fully repaid or forgiven, or the home is no longer occupied by the employee as their primary residence, the remaining loan principal and any accrued interest must be paid in full within thirty (30) days of transfer or change of occupancy.
Can I refinance the loan?
No, the forgivable loan may not be refinanced. The employee may refinance their primary loan, subject to the terms and conditions of the loan.
Is the forgivable loan transferable to another property in the area?
No, the forgivable loan may not be transferred to another property.
Can I use the loan to pay closing costs, points, or contribute to my down payment?
Yes, any of these uses are allowed, subject to any terms and conditions required by the participating bank and closing agent/title company. Proceeds of the forgivable loan are paid to the seller at closing.
If I pay cash for the property will the College still offer a forgivable loan in the amount of up to 10 percent of the purchase price up to $50,000?
No. This program is only available to eligible employees who obtain a primary mortgage for an eligible property in an amount not less than 50% of the purchase price of the home from a participating bank .