First-time home buyers program doesn’t add up
In Truckee’s housing market, if it sounds too good to be true it probably is.
The Town of Truckee was recently awarded a $500,000 federal home grant to provide down payment assistance to first-time homebuyers in Nevada County, but mortgage brokers say the program doesn’t work because eligibility requirements haven’t kept up with the times.
“If you qualify within these income brackets you won’t be able to buy a house for $300,000 even if you were awarded the maximum amount of assistance,” said Gina Taylor, a loan officer from Sierra Mountain Mortgage, Inc.
The grant program created by HUD will provide up to $40,000 in down payment assistance at 3 percent simple interest to first-time homebuyers.
Borrowers will not have to repay the loan or interest as long as they live in the home, as long as they are the bearer of the title, or until a period of 30 years passes.
“The grant will provide funding for 12 to 15 people depending on the loan amount,” said Cindy Woosley, a community programs analyst with the Nevada County Department of Housing and Community Services.
However, according to Taylor, first-time homebuyers who may be eligible for the program still won’t be able to buy a home in Nevada County because of outdated income caps, housing prices and lender criteria.
“I hear about all these different programs for first-time homebuyers but I can’t find a house in the price range that will work – not in Nevada County,” Taylor said. “HUD must understand that prices are higher in Nevada County because they increased the sales cap, but unless they increase the salary cap the program is useless.”
A single individual who earns just below the income cap who receives the maximum amount of credit would pay roughly $1,300 per month over a 30 year period for a home that costs $160,000, Taylor said.
Assuming no other debt, $1,300 per month would still be more than half of the person’s gross monthly income and could not meet the criteria for a lender.
“Normally, if I was simply punching numbers someone with 50 percent of their income going for the home’s sales price would be a very unlikely candidate to receive approval,” Taylor said.
Previous credit history, job stability, cash reserves and assets will make a difference, but chances are individuals who are looking for a home will have other costs that will reduce their gross monthly income. Car insurance, car payments, health insurance or school loans will lower the chances that individuals or families with low incomes will qualify for a home loan in Truckee, Taylor said.
“It all comes down to the sales price and monthly income.”
Woosley said the assistance plan is a good program for first-time homebuyers seeking low-income housing.
“The ideal candidate will be a family of four making close to the top income bracket,” she said.
To be eligible for the program homebuyers must meet the definition of a first-time homebuyer, be able to qualify for a first mortgage and qualify under the income guidelines.
The maximum purchase price is $189,500 for the unincorporated area of Nevada County and $340,575 for the town of Truckee.
Additional provisions of the program include the following:
— Homes must pass an inspection for Housing Quality Standards.
— Homebuyer education is required.
— Combination of both loans, first and second, may not exceed 100 percent of appraised value.
— Assistance is calculated so that a homebuyer will pay no more than 30 percent of their income towards their housing payment.
— The home at the time of purchase must be either owner-occupied, occupied by the applicant, or vacant for at least four months.
For additional information contact Nevada County Housing and Community Services at 10433 Willow Valley Road, Ste. C, Nevada City 95959 or call 265-1388.
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