Zero-interest home loans available for Gilroy’s first-time
Gilroy – City officials are sitting on a $200,000 pot of money for zero-interest home loans, but no one seems to care.
Officials have sent out notices to Realtors and local mortgage lenders, hosted two community workshops and advertised in local newspapers and on public access television, but so far only one family has applied for a loan of up to $50,000 through the city’s Homebuyer Assistance Program.
“People don’t wake up and say ‘I’m going to buy a house,'” Gilroy Housing Planner Regina Brisco acknowledged. “It takes time to plan these things, but we do expect the pace to pick up in the new year.”
The homebuyer program was originally intended to help firefighters, teachers and other public employees buy their first house in Gilroy’s pricey real estate market, but officials have widened the candidate field to all low- and middle-income earners who have resided in the city for at least a year.
Employees of the city or Gilroy Unified School District do not have to already live in the city, but they must have completed their employment probationary period.
Funding through the program, which resumed at the beginning of the month, will be offered on a first-come, first-serve basis to all first-time homebuyers.
Brisco expected more applications to flow into City Hall as hopefuls complete a laundry list of requirements that includes a financial training session. The next round of classes, which applicants must attend before submitting their loan requests, will take place Dec. 10 in Santa Clara and Sunnyvale.
“They will learn how lenders review credit scores, how to improve their credit score, how to budget and pay a mortgage on a monthly basis, and they will go over different loan programs and packages available to homebuyers,” Brisco explained.
The program offers 15-year loans ranging from $10,000 for a mobile home up to $50,000 for single-family houses. In the first five years, borrowers will not have to pay any interest on the loan; in the second five years, they only have to pay 5 percent; and in the last five years, they are only required to pay 8 percent.
Officials are restricting the program to low-income candidates through the end of the year, and will open it up to moderate-income families in January. A low income family of four can earn up to $84,900 annually to qualify, whereas a moderate-income family of the same size can earn up to $126,600, according to an income table in the city’s program guidelines.
Two years ago, the city gave a handful of $30,000 low-interest loans to local teachers and others on limited incomes as part of a collaboration with nonprofit South County Housing, the area’s primary builder of affordable housing. Officials intended to continue directing loans to public employees but were forced to sideline the homebuyer program after city attorneys raised concerns.
“They were worried the program was too narrow,” City Administrator Jay Baksa said. “If you’re doing it just for city employees or for some specific group, it wouldn’t meet fair housing laws.”
The expanded Homebuyer Assistance Program is supported by the city’s Housing Trust Fund, a $3.2-million pool of money earmarked for the construction of affordable housing and other projects intended to help people with limited income obtain housing. The money can only be used to purchase homes or construct projects within Gilroy.
Officials regard the reworked program as a test case for coming years, when they hope to offer a larger number of loans to residents and public employees.
Dennis Lalor, the executive director of nonprofit South County Housing, expressed hope that the city would increase funding, but called this first year an important gesture.
“It’s a statement by the City of Gilroy that they recognize that lack of affordability is a key issue here,” he said. “By collaborating with our group and others, (those funds) can actually make something happen.”
To qualify, you must:
• be a first-time homebuyer
• be a Gilroy resident or employee of city of school district
• be of low- to moderate-income
• have a first loan secured
• attend a financial education class
• To get full application details, visit the city’s Web site at www.ci.gilroy.ca.us or call Housing Planner Regina Brisco at 846-0242.