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HOW DOES THIS WORK?
The City may provide eligible homebuyers with up to $25,000 in HOME-funded assistance to
support homeownership opportunities throughout the City. Eligible assistance may be used for
down payment assistance, closing costs, principal reduction, and other eligible homebuyer
expenses as permitted under the HOME Investment Partnerships Program. HOME assistance
shall be provided as a zero-interest deferred forgivable loan secured by a Promissory Note and
Deed of Trust. The assistance will be forgiven on a prorated basis over the applicable
affordability period established by HUD regulations. Provided the homeowner continues to
occupy the property as their principal residence throughout the affordability period, the HOME
assistance will be fully forgiven and no repayment will be required.
Down Payment/Closing Cost Assistance: For persons interested in purchasing a newly
constructed or pre-existing home, the sub-recipients, Developer and Community Housing
Development Organization (CHDO) may provide down payment assistance of up to $25,000
toward the purchase of a home located throughout the City. The HOME direct subsidy balance
due will be reduced by an equal amount annually over a ten (10) year period during the
affordability period. This type of assistance is an incrementally forgiven, deferred loan that does
not require repayment as long as the household maintains the home as its principal residence.
However, if the property is sold within the ten-year period, then a pro-rated amount of the
forgivable loan shall be repaid to the City or its subrecipient at the time of sale.
HOW MUCH MAY HAVE TO BE REPAID?
If the house is sold by the homebuyer during the affordability period, the City will recapture the
remaining HOME funds out of net proceeds as follows:
Down Payment/Closing Cost Assistance: (EXAMPLE)
EXAMPLE: A homebuyer receives $25,000 in HOME-funded down payment assistance to
purchase a home. The direct HOME subsidy to the homebuyer is $25,000, which results in a ten-
year affordability period. The HOME assistance is forgiven on a prorated basis at a rate of ten
percent (10%) per year over the ten-year affordability period.
If the homebuyer sells the home after three years, thirty percent (30%) of the HOME assistance,
or $7,500, will have been forgiven. The remaining seventy percent (70%), or $17,500, will be
subject to recapture, provided there are sufficient net proceeds available from the sale.
The City or its subrecipient will recapture the remaining unforgiven HOME assistance from the
net proceeds after repayment of superior loan obligations and payment of customary closing
costs. Once the recapture requirements have been satisfied, all applicable federal HOME
program requirements will be considered fulfilled, and no additional affordability restrictions
will apply.
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