Grass Valley, California - First Time Home Buyers Assistance

Contact: Beth Owens (530) 274-4344 FAX (530) 274-4399

Items needed by the City for preliminary eligibility (and possible Reservation of funds):

Pre-qualification letter for a Market Rate 1^st mortgage and a signed and complete loan application from the first mortgage lender

Copy of recent credit report
Copies of your last 3 months pay stubs
Copies of your last 3 years federal tax returns, including all schedules

Annual income is defined as the gross amount of income of all adult household members (18 yrs and older) that is anticipated to be received during the coming 12-month period. This amount cannot exceed the following limits for household size:

Family Size Maximum Income *

1 $35,950

2 $41,100

3 $46,200

4 $51,350

5 $55,450

6 $59,550

7 $63,650

8 $67,800

( * denotes 80% of Nevada County median income)

Once the City has established preliminary eligibility, the applicant will be notified that they have 60 days in order to complete the following requirements and program terms:

1. Property eligibility

Single family dwellings, condominiums, duplexes, half-plexes and manufactured homes must be located within the Grass Valley city limits.

City building inspector will inspect the dwelling for compliance with basic health & safety requirements. Any violation of these standards must be corrected prior to City's final approval of down payment assistance for the dwelling.
Homes constructed before 1978 must meet the following additional requirements: A Lead based paint brochure entitled A Protect Your Family From Lead In Your Home@ must be read and receipt acknowledged by borrowers.

Each property must be inspected for defective paint surfaces by city inspector.

If inspection reveals defective surfaces, an assessment must be done to determine whether or not there is lead based paint in the home. If lead paint is found, it must be abated in order for the property to be eligible for the City=s down payment assistance program. Seller or buyer must pay for the assessment and any cost to abate lead in home. The City will not be responsible for these costs.

2. Purchase Price/Ownership Requirements

The purchase price/value of the house cannot exceed $394,250. The borrower=s maximum purchase price will be calculated based on the maximum first mortgage amount and the eligible amount of City assistance.

The purchase price cannot exceed the fair market value of the property as determined by an appraisal of the property obtained by the first mortgage lender and a copy supplied. The seller of the property must sign a notice acknowledging:

(1) The home is either a) owner-occupied, b) occupied by the borrower or c) if previously a rental unit, vacant for at least four months prior to the time of an offer.

(2) The purchaser has no power of eminent domain and will not acquire property if negotiations fail to reach a mutually acceptable agreement.

(3) The seller has been notified of the estimated fair market value of the dwelling.

(4) The sale of the property is voluntary. The seller may withdraw from the agreement prior to purchase if an acquisition notice has not been provided prior to the purchase offer.

Ownership must be held in the form of fee simple title.
If a co-signer is used, they must also be a first time homebuyer and be on title. In addition, their income is included for qualification and they must also occupy the home as their primary residence.

3. Loan terms and underwriting guidelines

The borrower(s) must have a clean credit history and qualify for a market rate 1^st mortgage.
The City will independently verify borrowers= employment and anticipated future income.
The City's loan must be in second position, behind the first mortgage.
The City's loan is secured by a second deed of trust.
The borrower(s) must view the City=s Home Purchase Education video.
The maximum amount of assistance is $75,000. The eligible assistance amount will be a calculation of the total dollar amount financed multiplied by the 30 year amortization factor of the 1^st mortgage interest rate, factored with the borrowers= monthly gross income and the required monthly housing payment limits. Monthly housing payments (PITI) include: payments for mortgage principle, interest, taxes, homeowners insurance, and mortgage insurance and/or homeowner=s association dues, if applicable. The total monthly housing payment must equal between 29% and 38% of the borrowers= anticipated monthly gross income (based on a 12-month projection). Approval of a higher ratio up to 40% will be considered with certain compensating factors, such as minimal payment shock, minimal credit use, excellent credit, job stability and residual income.
Loan terms are 0% interest with no monthly payments required. The note becomes due and payable when the borrower sells the home, rents the home, adds someone to title other than an immediate family member (defined as a parent, spouse or child), refinances without prior written approval from the City or changes the use from single family residential. Upon sale of the property, the City will collect a portion of any loan proceeds (see shared appreciation section below).
At the time the note becomes due and payable, the homeowner will be required to pay back to the City the original amount of the loan plus a percentage of the net appreciation on the home (appreciation less original closing costs and capital improvements to the property which were not financed by local, state or federal funds). The percentage of the shared appreciation to be paid to the City is the City=s loan amount divided by the original purchase price.

If the City denies an application, the applicant will be notified in writing of the reason for the denial and the applicant will be given the opportunity to submit additional information which may allow the City to approve the application.

G:\Recaptured Funds\Requirements Checklist Revised 6/06