Trying to bring a bit of relief to the situation, Housing Trust Silicon Valley is launching a program designed to help moderate and middle-income earners make down payments on houses. Bankrolled with $2 million of the Housing Trust’s own unrestricted funds, it is called the Homebuyer Empowerment Loan Program, or H.E.L.P.
For now, funds will be targeted at those looking to buy homes for up to $800,000 throughout Santa Clara County, as well as in East Palo Alto and Menlo Park in San Mateo County. If the program proves successful, the Housing Trust – which is a community development financial institution, basically a nonprofit bank – will likely try to expand its footprint.
To capture potential buyers who earn healthy salaries but still can’t get into the housing market, the San Jose-based Housing Trust will make loans to households earning up to 140 percent of the area median income. For a family of four in Santa Clara County, the median income is $113,300. Under H.E.L.P., a family of four could earn up to $158,620 and still be eligible for down payment assistance.
The program offers 30-year deferred loans covering up to 10 percent of the purchase price of a home. When the loan matures, the buyer pays back the principal loan amount plus a share of the home’s appreciation based on the percentage of the loan borrowed through H.E.L.P.
So another implementation of the same “DP for appreciation” idea. Some private startups are also offering similar programs, plus some Bay Area city governments.
I have been helping people passing information about these loans. Not the first time though, nope, not the best. I got the best.
Second loan of 20% down at 3% simple interest. You can pay it annually, or when you sell the house. No sharing with nobody, I have a shotgun.
Now, Jil, how can a bank survive with this type of loans, it will go BK, right?
They have $2M in funds. Exactly how many people will they help? Also, how many sellers will accept an offer with the added complexity in a red hot market? I have a friend that bought with a VA loan back when people were scared to buy. He’ll admit there’s no way he could use a VA loan today. The market is just too competitive. It’s similar to why you don’t see FHA in the bay area.
