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  • Homeownership
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  • Affordable Housing Policy

Middle Income Down Payment Assistance Pilot

On November 5, 2019 Boulder voters will be asked to approve an increase in City of Boulder debt by $10,000,000, without raising taxes , to provide downpayment assistance to middle-income households to purchase homes in Boulder in exchange for a permanently affordable deed restriction.

Why Statement

Boulder is making progress with building and preserving housing for low- and moderate-income households (30-60% of Area Median Income (AMI)). The city currently has 7.5% of its housing stock as permanently affordable and recently increased the goal from 10% to 15%. However, it is increasingly difficult for middle-income households (up to 120% of AMI) to purchase a home in Boulder. This is a result of housing prices outpacing income growth for many years, leaving many middle-income households priced out of home ownership in Boulder.

Purpose Statement

Create a program to assist middle-income Boulder workers or residents to purchase a home. The goal is to preserve economic diversity in the city and potentially reduce commuting into Boulder.

Pilot Outline

The city will issue bonds or draw upon a line of credit to provide down payment assistance to moderate- and middle-income home buyers to purchase a home. In exchange, the homeowner agrees to make that home permanently affordable through a deed restriction.

For example, the income-and asset-qualified purchaser locates a home to buy which is below the median price for that type of housing. The buyers’ have a down-payment of 5% ($30,000) but can only qualify for a loan from a commercial lender for 72% ($432,000) of a $600,000 purchase price. This leaves the buyers with a gap of 23% ($138,000). Under the proposed pilot, the city receives their application, determines if they are income- and asset-qualified and that the purchase price is below the median. The city borrows money to fund the second mortgage for 23% of the home value ($138,000). The advantage for the homebuyer is that there are no monthly payments on the second loan for the first 10 years, which reduces their monthly housing costs significantly.

In this example, the down payment arrangement continues until the home is sold or 10 years (whichever is earlier). At that time, the homeowner pays the city the amount of the second loan ($138,000) plus interest. The city’s financial position is restored, and the borrowed money is used to pay the city’s bond or line of credit. The home with the deed restriction remains permanently affordable and is sold through the city’s homeownership program to another eligible moderate to middle-income homebuyer with a maximum income of 120% AMI or less.


Additional program requirements may include the following:

Limits and Requirements

Maximum Loan Amount Buyers' Minimum Cash Contributions
$200,000 5%

Household Income and Asset Limits - 2019 (Maximum of 120% AMI)

Household Size Income Limit Asset Limit
1 $95,520 $140,000
3 $122,760 $170,000

Maximum Home Purchase Price - 2019 Median Sales Price

Single-family Home Condo or Townhome
$919,525 $435,000

Term

At 10 years, or transfer of ownership

Improvements

Allow additional equity for capital improvements

Other Requirements

  • Live or work in Boulder
  • Homebuyer education
  • Owner occupied
  • Short-term rentals prohibited
  • 15% set aside for city employees