Since the early 2000’s, the City of Sunnyvale Housing Division has administered a first-time home buyer (FTHB) loan program for moderate- and lower-income, first-time home buyer households. It is open to prospective first-time buyers who live or work in Sunnyvale, meet the program’s eligibility requirements, and intend to buy a home in Sunnyvale. City employees, DPS officers, local teachers and others may apply for this program if they meet all the eligibility requirements and find a home in Sunnyvale they wish to buy. The City’s Housing Division administers the FTHB program in-house.
There are two options under that program, one of which involves a shared equity model (for market-rate purchases). The shared equity model is part of the FTHB program, but rather than the loan having a 3% interest rate as it does for BMR purchases, it charges a shared equity payment at time of pay-off in proportion to the City loan’s percentage of the original purchase price. This option has not been used in recent years due to the high home prices which are infeasible for moderate-income buyers.
The second option is for those who purchase a Sunnyvale BMR home. In that case, the FTHB program uses a resale restriction and 3% simple interest rather than the shared equity model. In both cases, the loan is due and payable in full upon resale, refinance, or owner’s move from the home, or 30 years from loan date, whichever occurs first. All payments of principal and interest are deferred until that time.
In the early 2000s there was also a second program, slightly different from the FTHB program, called the HPPC program (Housing for Police, Public Sector, and Child Care Workers) which was similar to the FTHB except that it did not require income eligibility and there were some other differences in eligibility criteria, and it was only available to City employees, staff of local school districts, and child care workers. However it was not widely used, and there were several concerns with the program structure and related issues. In 2009 as part of a simplification/restructuring of several housing programs, it was consolidated with the FTHB program.
The current guidelines for the FTHB program are online here.
Recently, Councilmembers have been approached by a vendor who is offering to administer a shared equity fund for helping people afford homes in Sunnyvale. The program allows an investor (e.g., the City of Sunnyvale) to co-invest with a homeowner, thus reducing the amount of down payment necessary and, thereby, reducing their monthly housing expenses. allow an investor (e.g., the City of Sunnyvale) to co-invest with a homeowner, thus reducing the amount of down payment necessary and, thereby, reducing their monthly housing expenses.
The City would retain a share of the equity in the property. At time of home sale, the City would recoup its share of the investment and any appreciation or depreciation in the market value of the property.
I would like for our City’s homeownership programs to be relevant for the market. What do you think?