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First-Time Homebuyers Downpayment Assistance Program
Program Description: Funded by the City of Desert Hot Springs Redevelopment Agency, this is a silent second mortgage loan program with an equity share for low to moderate-income first-time homebuyers with principal payments deferred. The Principal payments are due in 30th year or upon sale or transfer of property, when property ceases to become owner-occupied, or upon repayment or refinancing of first mortgage, whichever comes first.
Loan Term: 45-year term
Maximum Loan Amount: 20% of the purchase price, however, may not exceed $20,000
Equity Sharing Payment Equity Sharing Payment will be forgiven in the event borrower owns and occupies the property for the first 30 years of the 45 year term.
Calculating Equity share:
Year Percentage of Equity Share Payment
1-7 100%
8-12 75%
13-17 50%
18-22 25%
23-30 10%
31+ Equity Share is forgiven, only principal loan needs to be repaid.
Example: You receive $20,000 in assistance and your purchase price was $100,000, the equity share percentage is 20%. ($20,000/$100,000). If in 5 years you sell the property for $130,000, the appreciation is $30,000. The Equity Share would be 100% (Year 1-7) of the 20% equity share of the appreciation or $6,000.
Maximum Purchase Price: 150% of Desert Hot Springs median home value on July 1st of each year. Contact Rancho Housing Alliance or the City of Desert Hot Springs for most recent maximum purchase price update at (760)391-5050 x232 or (760) 329-6411 x226.
Interest Rate: 3% interest
Closing Costs: Borrowers are required to pay usual and customary loan fees, closing costs, and reserves, as in any purchase transaction. See below for minimum contribution.
Minimum Buyer Contribution: Minimum 3% of purchase price contribution required. (Borrower may not contribute more than 20% of the purchase price)
Cash Reserves: First mortgage lender may also have reserve requirements.
First-Time Homebuyer: All buyers on title must be first-time homebuyers defined as follows: 1. Someone who has had no ownership in a principal residence during the 5-year period ending on the date of purchase of the property; or 2. A displaced homemaker who owned a home; or 3. A single parent (unmarried or legally separated) who owned a home with custody of minor child(ren); or 4. An individual who has only owned a mobile home.
Maximum Household Income (2009):
Household Size: Moderate Income:
1 $54,200
2 $61,900
3 $69,650
4 $77,400
5 $83,600
6 $89,800
7 $96,000
8 $102,150
Citizenship/Residence Status: All applicants on title must provide evidence of U.S. citizenship or permanent resident alien status.
Eligible Areas: City of Desert Hot Springs (excluding unincorporated areas)
Eligible Properties:
1. Single-family properties; 2. Condos and planned unit developments (PUDs) allowed; 3. All borrowers on title must occupy property as their primary residence; 4. Rancho Housing Alliance to verify eligibility of properties.
Geographic Availability
The program will fund one loan in any single housing development, during a 30-day period.
Underwriting: Underwriting decisions by the first mortgage lender (credit, debt ratios, etc.) apply.
Credit: At time second mortgage loan is recorded there shall be: 1. No credit accounts past due at time loan is recorded; 2. No outstanding unpaid judgments or involuntary liens; 3. No bankruptcies.
Borrower must have sufficient credit worthiness to qualify for and obtain first loan through a lender, as verified through a Credit Report, to be paid by the applicant.
First Mortgage Loan Requirements: Applicants to obtain 30-year first mortgage loan from a lender (see Application Procedures); 2. First mortgage lender required to establish impound accounts for taxes and insurance for the term of the first mortgage; 3. First mortgage loan must have fixed interest rate not more than current market rate (no ARMs); 4. Buyer must meet underwriting and eligibility guidelines of first mortgage lender.
Maximum Loan to Value (LTV): Combined loan to value cannot be more than 100% of purchase price.
Homebuyer Education Requirements: Buyer must obtain a Homebuyer Education certificate from Rancho Housing Services (see Application Procedures). The certificate must be dated within the last 12 months from the date application is received. Borrower is also required to enroll, attend, and participate in a one-on-one housing counseling session with Rancho Housing Alliance staff prior to loan closing.
Further Questions: Please contact Rancho Housing Alliance at (760)391-5050 x246 or the City of Desert Hot Springs at (760) 329-6411 x226.