While interest rates are low and residential inventory for sale is at an unprecedented high, it is more challenging than ever to obtain an affordable mortgage and qualify first-time homebuyers. Geographic variations on the other hand offer opportunity to leverage the demand through state- and local-level solutions that fit local market needs. It is what some state agencies are making efforts to supply.
The Texas State Affordable Housing Corp. recently added a new alternative to its first-time homebuyer options. Its Home Loan Programs provide grants of up to 5% of the loan amount to be used for downpayment and closing cost expenses—usually a stumbling stone for these buyers. The corporation also offers a 4% interest rate on fixed-rate mortgages to help promote homeownership among designated groups of buyers who need some assistance to make homeownership affordable. “Now is a great time for first-time homebuyers to take advantage of these programs,” said TSAHC president, David Long, “while mortgage rates are at historic lows.”
The Home Sweet Texas loans are designed for individuals or families whose annual income is at or below 80% of the area median family income. The Professional Educators loan option was created for full-time classroom teachers, teacher's aides, school librarians, nurses and counselors employed by a Texas public school district, as well as for full-time faculty members of undergraduate and graduate level professional nursing and other health education entities in the state.
The Homes for Texas Heroes offers housing opportunities to full-time firefighters, emergency medical services personnel, public security officers and corrections officers.
The primary eligibility requirement is that buyers qualify as first-time buyers, which includes all borrowers who did not have any residential mortgage responsibilities in the last three years. Also, buyers must meet income and home price limits for the area, and complete a HUD-approved homebuyer education course before they start negotiating for a home purchase. The Federal Home Loan Bank of Dallas is offering the Homebuyer Equity Leverage Partnership grant through members and other partners. The grant is part of $1 million in HELP funds provided by the FHLB of Dallas to member banks at up to $5,000 in grants for one recipient. The program however can be combined with other sources.
For example, a qualifying homebuyer in Jackson, Miss., is now a homeowner thanks to a partnership between the FHLB of Dallas (through BankPlus) and the City of Jackson, accumulated $17,000 in grant money reducing the out-of-pocket amount paid by the new owner to over $600.
“The ability to combine these two grants shows that a little bit of extra effort can make a big difference,” said BankPlus director of affordable housing, Mark Quellette.
The Michigan State Housing Development Authority issued a total of $70 million in bond financing that will fund the origination of mortgage loans affordable to low- to moderate-income borrowers across the state in partnership with approved MSHDA lenders.
The single-family home purchase financing program provides “at below market interest rates” and up to $7,500 in downpayment assistance. Homeowners earning up to 80% of the county's median income adjusted for family size, or $59,600 to $108,000, may qualify for a 30-year fixed-rate loan on new and existing homes priced up to $224,500.
In New York, efforts to provide affordable housing options often are incorporated into projects to rehabilitate and preserve the existing housing stock. One such example is the restoration of 36 historic buildings in Central Harlem (along the north and south sides of West 114th Street) by the NYC Housing Authority that will generate 295 affordable and public housing units.
The initiative was applauded as the first to use a HUD mixed finance program that combines public and nonpublic housing in a single development.
The rehabilitation of 22 previously vacant tenement buildings on the south side will generate public housing and units designated as affordable to households earning at or below 60% of the area median income or an annual household income of up to $49,080 for a family of four. The second phase of the renovation targets 14 tenement buildings on the north side currently occupied by NYCHA tenants who will be relocated into the renovated public housing units. The north side units will be developed as mixed-income affordable rental units with at least 25% of the units designated for households earning at or below 60% AMI and 75% of the units for families earning up to 130% AMI, or up to $106,340 for a family of four.
