Financing
Soft Second Mortgage Program

Homebuyers' Qualifications

  1. Applicant must be at 80% or less of median income adjusted for family size.  CURRENT HUD INCOMES PUBLISHED IN 2010. The following are maximum incomes, at 80% median, adjusted for family/household size:
    • Household Size of 1: $34,200
    • Household Size of 2: $39,050
    • Household Size of 3: $43,950
    • Household Size of 4: $48,800
  2. Applicant must be a first time home buyer (as defined by HUD - not having owned a home in the preceding 3 years, not including a mobile home not permanently affixed to a permanent foundation. Less than 3 years OK if a displaced single parent.)
  3. Applicant cannot have liquid assets (cash and readily convertible to cash) in excess of $15,000.
  4. Residence must be owner-occupied, under guidelines established for the program.

Program Policies

  1. Each first mortgage amount will be determined by the permanent (first mortgage) lender.
  2. Each lender will be working with a definition of “Income” (monthly and annualized) that meets the requirements for our program. The lender will apply that definition to the facts confirmed in each borrower's application.
  3. Each lender will determine a monthly mortgage payment amount acceptable to them.
  4. Consistent with the City's initiative to provide “affordable housing,” each applicant’s mortgage amount should not exceed 33% of their gross family income. If it exceeds 33% of gross family income, FHDC must receive written City approval of the loan package.
  5. Applicant may have a co-signer not residing in the dwelling unit, if approved by FHDC. A co-signer’s income will not be included by FHDC to determine whether “qualifying income” is at or below 80%, provided that the co-signer is not on the title to the residence.
  6. Sole and separate applicants (married persons acquiring the residence as separate property and planning to obtain financing in their own name) may be allowed, if approved in accordance with guidelines adopted for our program.
  7. Applicant must complete and provide certification for a homebuyer education training program acceptable to HUD.
  8. Applicant must borrow the maximum amount they qualify for on their first mortgage.
  9. Soft second loans may be used to pay eligible closing costs, but may not cover non-eligible closing costs such as prepaid interest, taxes and insurance.
  10. FHDC and the City will not allow interest rate buy downs due to the high number of defaults associated with them. We also will not allow interest-only mortgages.
  11. Using our program assumptions, the average soft second financing would be around $70,000 for each applicant. Note to non-profits and real estate sales agents: When pre-qualifying applicants, use $70,000 as the available soft second amount. Anyone needing more may have to wait until we can determine that excess funds are available.