First-time homebuyers in Los Angeles, where prices are increasing rapidly, could soon get a bit of badly-needed assistance from the city.
The Los Angeles City Council approved a plan Wednesday to resurrect a loan program for middle-income earners, while expanding an existing program for low-income buyers.
Both programs offer sizable loans to buyers for use as a down payment. The loans do not accrue interest and require no monthly payments. Instead, the city shares in the appreciating value of the home. Participants are only required to pay the money back when selling the property or once they have paid off their mortgage.
The two programs were established in 2005, but funding for the middle-income loans quickly dried up. Now, however, the city’s Housing and Community Investment Department plans to use $3 million in fees collected from lenders who own foreclosed homes to get it back up and running.
Eligible participants will be first-time buyers making between 81 and 150 percent of median income in Los Angeles ($48,651 to $91,200 for a single buyer). Those making under 120 percent ($72,900) can receive loans up to $75,000, while those making between 121 and 150 percent can get loans up to $50,000.
Requirements for the city’s Low Income Purchase Assistance program won’t change, but buyers will now be able to receive loans up to $90,000 value—significantly higher than the $60,000 cap now in place.
Loans for low-income buyers will be available for homes up to $475,000 in price, but the middle-income loans will have no home price limit.
Under the plan approved by the council, HCIDLA will seek additional funding for both programs from Neighborhood Housing Sevices of Los Angeles County. The legislation is now awaiting the mayor’s signature.
- LA County’s median home price bests pre-recession record [Curbed LA]
- Report: LA is the nation’s most unaffordable housing market—and prices will keep rising [Curbed LA]
- Report: LA millennials have the lowest rate of homeownership in the nation [Curbed LA]
Comments
Let’s see… shall we make homes more affordable for every by widespread upzoning at a cost of $0?
Or shall we spend millions of dollars providing loans on unaffordable houses so that people who probably can’t afford it take on 100% debt??
LA City Council’s answer? Spend millions on a bad idea of course.
By goingup on 06.29.17 8:40pm
WHERE AND HOW DO I SIGN UP?
By Opal Blue on 06.30.17 9:52am
I, too, like free money, and would also like to know how to get some.
By disqusted on 06.30.17 10:25am
Are they adding the $3M to a larger fund, because $3M is not going to go far. Apply fast.
By CaliSon on 06.30.17 10:52am
The Democrats did something similar to this before. It led to the 2008 housing collapse. If at first you don’t succeed, bankrupt the country a second time.
By LADude on 06.30.17 2:01pm
SMDH. We haven’t learned a god dammed thing have we. Oh well, I’ll save my money and wait for the inevitable bust (which will be blamed on the greedy banks) to swoop in on some deals.
By DJCRoy on 06.30.17 2:11pm
The fundamentals of this program are quite a bit different – it’s not a no-down-payment situation, it’s essentially a no-interest loan that is paid off either upon sale or as a quasi-extension of the existing mortgage once that is paid off. It’s basically a short-cut to otherwise-qualified buyers who can afford monthly mortgage payments but have not been in a financial position to save up tens of thousands of dollars for a down payment, which is a pretty significant percentage of mid-to-high salary Millennials given the economic situation dumped on them by the Boomers.
This wont’ fix the long-term housing situation, but a program this small and this targeted certainly isn’t going to be the catalyst for the next market correction (it will be a correction, not a collapse, the fundamentals are wildly different).
By disqusted on 06.30.17 2:42pm
Uh, no, the Democrats did not do this, and it was not the cause of the 2008 collapse. Stop listening to right-wing propaganda. Every single banker paraded to Capitol Hill in 2009 explained why the collapse happened: massive banker speculation on unregulated derivatives and massive reckless loans by private bankers, not the gov’t. Not one single banker blamed the Democrats. That should give you a clue that your information source is bogus.
By TheEntity on 07.01.17 1:31pm
Oh good grief.
So now the rest of us are going to subsidize home purchases for those who are completely unqualified, furthering the bubble. Can’t wait to see the LA City sponsors blame the next crash on the banks, again.
If the city wants to "help" first time buyers, they need to get out of the way, not fuel the fire.
Formula: remove rent control, remove HPOZ, repeal Prop U, re-imagine parking requirements, i.e. allow off-premise deeded parking shares, and of course, dis-invite the half-million "residents" who don’t have the legal right to dwell here.
By smartalex on 06.30.17 3:20pm
Buy an RV like a lot of people do now. Park it in some suburban neighborhood, just move it every few days.
By Jimmy Wong on 06.30.17 5:17pm
Max income for a married couple is $104k. What is the realistic amount a family has to earn to buy a $700k home? Cuz even with help, that isn’t enough to cover a mortgage, property tax, insurance, etc. We are so f*cked here.
By jkleinbart on 06.30.17 6:49pm
A couple making 104k would only be spending ~40% of their income on a $700k house covering mortgage, property tax, insurance.
By RXBXUXNX on 07.05.17 9:33am
Plus you have to factor in the substantial tax write-offs they’d get from the mortgage interest deduction.
By disqusted on 07.06.17 10:24am
A couple making 104K would buy something around 500K, and that’s a stretch…
*and their take home would be more like 80K cause taxes…
By Opal Blue on 07.28.17 12:07pm
"The loans do not accrue interest and require no monthly payments. Instead, the city shares in the appreciating value of the home."
What happens if value depreciates? Does the city share the loss as well? Ridiculous.
By dudeimstarving on 06.30.17 7:03pm
A Whole bunch of craziness going on here. I can’t completely put my finger on it, but this deal doesn’t sound good at all. Where is the money going to come from to loan people/residence up to $90,000 per person!?
By subaruwrx on 07.10.17 2:41pm