CITY OF COMPTON FIRST TIME HOME BUYER PROGRAM
The Community Redevelopment Agency of the City of Compton has designed the First Time Homebuyers Program to relieve the prevailing housing affordability crisis in the community. The Program consists of a Second Mortgage, which is in the form of a Silent Second Deed of Trust loan. An eligible household may receive mortgage assistance up to $100,000 (if your household is Moderate Income) and up to $150,000 (if your household is Low Income). The amount awarded, however, will be based on the need for each household on a case by case basis.
WHAT IS SECOND MORTGAGE ASSISTANCE
Second Mortgage Assistance is a subsidy provided to qualified first time homebuyers in the form of a deferred Second Deed of Trust Loan. The Agency’s subsidy shall provide gap-financing to make up the difference between the market value of the property and a purchase price that renders monthly principal, interest, taxes and insurance (PITI) affordable to the homebuyer. The maximum loan awarded by the Agency is $100,000 (for moderate income households) and $150,000 (for low income households) which may be used towards purchase of the property including closing costs.
The funds may be used for a larger down payment to make up the difference between the amount in which the buyer qualifies and the actual sales price of the property. For example: If the property sells for $310,000 and the family qualifies for only $210,000, $90,000 of the $100,000 subsidy may be used to reduce the mortgage and up to $10,000 may be used towards closing costs.
After securing the loan with a Second Deed of Trust, a lien will be placed against the property that is being purchased with the Agency’s assistance. The Agency will serve as the Program Administrator, and participating mortgage lenders will be responsible for processing and underwriting the homebuyer(s) applications for a first mortgage.
WHO QUALIFIES TO BUY A HOME UNDER THE PROGRAM ?
Qualified buyers must be a first time homebuyer or must not have owned or held an interest in a primary residence in the past 3 years. Priority shall be provided to residents and households who are employed or reside within the City of Compton.
Additionally, qualified buyers must:
A. Have sufficient income and credit worthiness to qualify for primary financing from a participating lender.
B. Occupy the purchased property as their principal residence for 15 years.
C. Attend and complete a first time homebuyer counseling and training session held by an approved Counselor Services Agency or Lender.
D. Have a combined gross annual income, which does not exceed 80% of low income limits or 120% of moderate income limits of the gross annual median income for Los Angeles County, adjusted for family size per the following chart:
Los Angeles County Housing Income Limits
Family Size Low Income Moderate Income (80%) (120%) 1 $42,450 $50,300 2 $48,500 $57,400 3 $54,600 $64,600 4 $60,650 $71,800 5 $65,500 $77,500 6 $70,350 $83,300 7 $75,200 $89,000 8 $80,050 $94,800
The above chart shows maximum annual household income per family size for low to moderate income households, which funds are allocated in each category as follows:
- Participants that have an annual combined household income that falls at or bellow the 80% of the gross annual median income for Los Angeles County, will receive a federally funded HOME mortgage assistance program of up to $150,000 in a form of gap financing on a first-come, first-served basis.
- Participants that have an annual combined household income between 80% and 120% of the gross annual median income for Los Angeles County will receive mortgage assistance up to $100,000 in a form of gap-financing under the State Low Cost Housing Fund Program on a first-come, first-served basis.
WHO IS A FIRST TIME HOMEBUYER ?
In accordance with HUD guidelines, first time homebuyer means:
A. Any individual and his or her spouse who has not owned a home during the 3-year period before the purchase of a home with HOME funds or Low Cost Housing funds.
B. Any individual who is a single parent who previously owned a home with his or her spouse or resided in a home owned by the spouse.
C. Any individual who has owned a mobile home during the 3-years prior to the purchase of a home under the Agency’s program.
WHAT DOCUMENTS MUST BE FIRST TIME HOMEBUYERS SIGN TO SECURE THE AGENCY LOAN ?
- Promissory Notes
- Deed of Trust (recorded)
- Loan Agreement / Resale Restriction (recorded)
WHAT PROPERTIES ARE ELIGIBLE ?
Any single family house, condominium, or townhome located within the City of Compton with a property value at HUD-prescribed levels (not to exceed 95% of the area medium home value for Compton) generally are eligible. This applies to those participants that receive HOME funds (Low Income).
HOW IS THE LOAN REPAYABLE TO THE AGENCY ?
The loan provided to the homebuyer is interest-free and does not require monthly payments. After five (5) years, the loan will be reduced 10% annually. Furthermore, the loan is forgiven if the borrower lives in the property for the entire 15 years.
However, the full loan amount will be due and payble upon the occurrence of either of the following:
A. The sale, refinancing, or transfer of the property.
B. The property is no longer owner-occupied.
C. The discovery of willful misrepresentation or fraud in connection with the program.
D. Death of Owner.