ARLINGTON, Va. – April 28, 2009 – (RealEstateRama) — The Arlington County Board today approved the first increase since 2003 in purchase assistance for low and moderate income first-time homebuyers, a move designed to make it easier for those who are eligible to buy homes in Arlington.
The new limit provides up to 25% of the purchase price, up to the federal Housing and Urban Development purchase price limit of $362,790. The maximum loan under the program would be $90,700. The County estimates that most loans will be in the $50,000 to $70,000 range.
“This long overdue improvement of our program to assist low-and-moderate-income first-time homebuyers comes at just the right moment,” said Board Member Barbara Favola. “Now more than ever before, families with limited incomes need help to purchase their first homes and to buy them in Arlington. We believe this is a good investment in these families and in our community.”
Favola noted that many low and moderate-income families are being priced out of the Arlington housing market, and that the Moderate Income Purchase Assistance Program, (MIPAP), established in 1982, was not meeting their needs. From 2000 through 2005, the federal Housing and Urban Development Median Income for the Washington DC Metropolitan Area stayed flat, while housing prices in Arlington doubled to a median price of $537,500 in 2008. MIPAP loans peaked in 2000 at 65. By 2008, they were down to just 11.
Increase boosts purchasing power of low and moderate income families
Under the new program, a family of three with an income of about $62,000, armed with a second trust MIPAP loan at 25% of the purchase price, or $73,000, could buy a $292,000 home.
Move expected to help 15 to 20 households
With $1.2 million in the program, the increase could help up to 15 to 20 households buy their first home this year. Currently, 100 eligible households are on the County’s wait list for purchase assistance. Potential home buyers must attend a Home Buyer Education class and priority is given to families who live or work in Arlington. The income limit is 80% of the Area Median Income. Funding for the program comes from a variety of sources.
Shared appreciation will ease payment burden, sustain fund
The Board also approved changing the program from a traditional interest bearing note to a shared appreciation model. Under the old program, the County loaned the money to the homebuyer with no interest or mortgage payments for the first five years. In the sixth year, the loan repayment was about $125 a month.
Under the appreciation model, there is no interest or monthly loan repayment to the County. Instead, when the homeowner sells or refinances the property, he or she must repay the principal of the County loan, plus a proportionate share up to 25% of the difference between the original purchase price and the new sales price, less the value of any seller’s concessions. This gives the homeowner an incentive to refinance as soon as possible, because once the County is repaid, the homeowner would keep 100% of the appreciation going forward. If the property does not appreciate in value at the time of the sale or refinance, the County would be paid the amount of the original loan.
The County would use the repaid funds to make loans to new buyers. When the home is sold, the County would have the option to buy the home at its appraised value and add the unit to its stock of affordable ownership housing.
“Many neighboring jurisdictions, including Fairfax, Loudoun, Prince William counties and the City of Alexandria have already adopted this model, or are designing programs that will use it,” said Ken Aughenbaugh, the County’s Affordable Housing division chief.
Affordable condos coming at Davis Place
The Board also reserved $737,500 of MIPAP assistance for households buying at Davis Place, a new affordable housing development in the Nauck Neighborhood. Arlington Housing Corporation is developing a 10-unit affordable condominium project on 17th St. S in Nauck. It will house families earning less than 80% of the median income.
Construction is expected to be completed in June 2009. Davis Place represents the first new home construction project in 4 years designed to work in tandem with the County’s affordable homeownership program. The homes are priced at $315,000 for a 3 bedroom unit and $265,000 for a 2-bedroom, well below other similar homes in the surrounding area. The County’s funding is needed to provide second trust loans to make the home prices and mortgage payments affordable to the target households.
For more information on Arlington County’s affordable housing programs, visit the County Web site, keyword “affordable housing.”
Arlington, Va., is a world-class residential, business and tourist location that was originally part of the “10 miles square” parcel of land surveyed in 1791 to be the Nation’s Capital. It is the geographically smallest self-governing county in the United States, occupying slightly less than 26 square miles. Arlington maintains a rich variety of stable neighborhoods, quality schools and enlightened land use, and received the Environmental Protection Agency’s highest award for “Smart Growth” in 2002. Home to some of the most influential organizations in the world – including the Pentagon – Arlington stands out as one of America’s preeminent places to live, visit and do business.
Contact: Mary Curtius 703-228-7943 (voice) 703-228-4611(TTY)
