First-time home buyer program approved

$25 million from housing bond will provide down payment assistance

SAN JOSE » Santa Clara County supervisors have approved a $25 million programto help first-time home buyers land their dream house, providing potential relief to families struggling with the region’s soaring cost of housing.

The money, which comes from the $950million affordable housing bond voters approved in 2016, is slated to help about 250 households over the next five years. In a county where the median sales price of a house has increased 56 percent in the past three years — hitting $1.2 million in March, according to Zillow — supervisors say this new program, one of many offering down payment assistance in the Bay Area, is a crucial part of the solution.

“Affordable housing has been one of Santa Clara County’s biggest challenges for several years now, and it seems to get worse every month,” Supervisor Ken Yeager wrote in a news release Wednesday. “The first-time home buyer assistance program will give many residents an opportunity that would otherwise be out of reach.”

First-time home buyers who make up to $150,000 a year for a family of four and are looking to purchase a house within Santa Clara County with a price tag of up to $800,000 are eligible for the loan. The amount will cover a down payment of up to 17 percent of the home’s value — meaning the buyer would have to contribute 3 percent in order to come up with the standard 20 percent payment. Buyers also must certify that they will occupy the home themselves — not rent it out — and they must attend a home buyer counseling class.

Borrowers must pay back the loan — plus a share of the home’s appreciation — after 30 years, when they sell the home, or when they refinance their first mortgage — whichever comes first.

The county- sponsored program will be run by Housing Trust Silicon Valley, which has been issuing its own down payment loans since late last year. That program, called the Homebuyer Empowerment Loan Program or H. E. L. P. launched in November, and so far has helped two families purchase homes, said Adria Quinones- Masur, home ownership program manager. Another four families have applied, while 25 are working with lenders to get pre-approved for mortgages. More than 100 families have expressed interest in the program, she said.

There are many such programs throughout the Bay Area, where the housing crunch has hit firsttime home buyers especially hard. San Franciscobased company Unison, the city of Oakland, the city of San Francisco and San Francisco- based startup Landed all offer similar loans for down payments. In November, Wells Fargo invested $ 9.7 million to fund $ 30,000 down payment assistance grants for home buyers in Alameda, Contra Costa, San Francisco and Solano counties.

In exchange for help with a down payment, most programs require buyers to give up a portion of the potential profit they stand to make when they sell the home, whether one, 10 or 20 years down the line. For example, Landed, which provides down payment loans to Bay Area teachers, takes 25 percent of a home’s future appreciation.

That can be a bitter pill to swallow, especially in a market where home prices are rising so rapidly, said Dick Lepre, a senior loan adviser with RPM Mortgage.

But if a buyer couldn’t afford a down payment without such a loan, Lepre would advise him or her to take the offer — and try to refrain from second-guessing themselves when time comes to sell the property. As long as the buyer reads the fine print of the deal, it can be a good option, he said.

“If this is your only choice, do it because it gets you into home ownership,” Lepre said. “Having to worry about having to split your profit when you sell it to someone else really isn’t the worst thing that can happen to you.”