RHA is able to provide mortgage assistance thanks to the generous donation of $1 million by
BP America.
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Mortgage Assistance
Through a cooperative relationship with La Plata Homes Fund (LPHF), the RHA provides "silent" second deed of trust loans of up to $80,000 for income-qualified homebuyers.
- The loans are available only to income-qualified homebuyers who have completed RHA’s homebuyer training and counseling program, and are able to obtain a fixed-rate, 30-year conventional home purchase loan. (Sub-prime loans are not allowed.)
- Low-income (below 80% AMI) and larger families get the largest loans.
- Homebuyers in the “workforce housing” category (80%-125% AMI) and smaller families receive loans as small as $15,000.
- To keep homeownership affordable, the loans have no monthly payments and are repaid only upon resale or transfer of the home. At that time, the original principal is due and payable, along with a share of the appreciated home value. (For example, if LPHF loaned 10% of the purchase price, it receives back 10% of appreciation as, "loan interest.")
For example, assume a homebuyer wants to purchase a $250,000 home and is able to come up with $5,000 for the down payment. Working with a local lender, the homebuyer qualifies for a first mortage in the amount of $195,000. For this example, assume that the homebuyer qualifies for a loan from the RHA for the remaining balance of $50,000. This $50,000 represents 20% of the purchase price ($250K).
RHA Example |
Buyer down payment |
$5,000 |
First mortgage |
$195,500 |
RHA second mortgage (20%) |
$50,000 |
Total financing |
$250,000 |
Let's assume the homeowner sells the house after 10 years for $350,000. After selling expenses and home improvements, the homeowner's net appreciation is $70,000. In return for initially receiving the 20% loan ($50K) from RHA, the homebuyer now pays back the $50K plus $20% of the net appreciation ($14,000 = 20% x $70,000) from the sale of the house. The seller is left with remainder of the net appreciation ($56,000). This method of mortgage assistance is referred to as shared appreciation.
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