| Applicant Eligibility |
- Must be a first-time homebuyer (not owned primary residence for 3 years).
- Preference given to applicants who live or work in Newark, or have immediate family in Newark. (See Application Process).
- Household income cannot exceed 80% of area median income (AMI) for Alameda County adjusted for family size.
- Must qualify for a first mortgage loan on non-predatory terms, which generally will require a FICO score (credit rating) of 620 or greater.
- Prescreen worksheet must be submitted to First Home, Inc., the Program Administrator. (See Application Process).
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Eligible Properties
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- Single-family attached or detached residences, within Newark city limits, including town homes or condominiums.
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Maximum Loan
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- Up to $40,000 depending on need.
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Laon Terms
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- 35-year term. No interest or payments for first five years; then 3% interest compounded monthly, amortized over remaining 30 years.
- Borrower required to pay at least 3% of purchase cost; can be used for closing fees and/or down payment.
- Borrower must remain owner/occupant through the term of the loan.
- Homebuyer education certificate required.
- Annual administrative fee waived for the first year; may be included in monthly payments in 6th year and thereafter.
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Repayment
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- Payments deferred for five years, then begin at 6th year and run until the loan is fully paid.
- Loan balance becomes due in full upon a “triggering event” such as: sale, transfer of title, cash-out refinance, conversion to rental/income property, property owner moves out, default on first mortgage, or failure to comply with any other program rules.
- This is a “Shared Appreciation” loan (See “Equity Participation” below).
- There is no pre-payment penalty.
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Equity Participation
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- Upon sale or other triggering event, the seller will pay the City a share of the appreciation of the property, based on the proportion of the City’s loan to the original purchase price. For example, if the City’s loan is 20% of the original purchase price, the City’s share of the appreciation would be 20%.
- Paying off the City loan will terminate appreciation sharing.
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Loan Security
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- City loan is secured by second deed of trust.
- Junior loans from another source, such as the Federal Home Loan Bank’s WISH program and a variety of CalHFA programs, may be available to leverage the City loan.
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Summary
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- This table presents a summary of the program. The Program Manual gives more detail. The definitive source for program terms and conditions are the notes, deeds, and regulatory agreements the buyer will execute as part of a real estate escrow.
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