Cohousing-L Mailing List: Re: Affordable Cohousing

[Gerald Rioux (rioux]

This is my first posting and request everyone's indulgence for any rules 
that I may have broken in the process. 

In a message to Rob Sandelin, Dan Suchman said the following:

DS> Do you know of any examples of affordable cohousing that were created by 
some means other than the three that I outlined?  Do you know of any 
communities that have qualified for FHA or VA financing?  I would greatly 
appreciate any information that you may have in these areas. 

DS> I look forward to hearing any other comments or information that other 
readers may have.

Dan:  The River City Co-Housing group in Sacramento received both 
development financing and second mortgages from the Sacramento Housing and 
Redevelopment Agency for their project.  The second mortgages reduced the 
amount of bank financing that lower income members had to borrow.  This made 
their housing costs affordable.  

I am not aware of other co-housing groups that have received government 
subsidies, but I presume there must be other.  The reason I say this is 
because the individual units in any co-housing project that looks and feels 
like conventional housing (i.e., a planned unit development, condominium 
or cooperative) to a government agency and private lender should qualify 
for a variety of government subsidies that are available for ownership 
housing throughout the country (i.e., the USA).  Anyone who is concerned 
about ensuring that their project is "affordable" should explore these 
program--and not the FHA and VA financing, which generally have the same 
rates and terms as conventional financing. 

I would put the Mortgage Credit Certificate or MCC program at the top of 
my list.  With MCCs, qualified first time home buyers receive a federal 
income tax credit for 20% of the mortgage interest they pay each year.  
This is a direct tax credit--not a deduction--and reduces the effective 
cost of financing a home.  MCCs are generally administered as a 
partnership between a state or local government agency and private lenders.

The second program that folks should look into is called the HOME 
Investment Partnership Program (HOME).  It's a federal block grant to 
states and larger cities and counties.  HOME funds can be used to provide 
deferred payment second loans to help people earning less than 80% of the 
county median income to buy a home.  

The third program is the Community Development Block Grant (CDBG) 
program.  CDBG is another federal block grant to states and larger cities 
and counties.  It can be used in much the same way as the HOME program, 
but must compete with other potential uses for the funds.

The fourth program that is available nationwide is the Affordable Housing 
Program or AHP.  AHP is funded from the profits of the savings and loan 
industry.  (Its what we get back for bailing out the S&Ls that went 
under.)  AHP funds can be used to either buy down the interest rate on a 
home loan or fund a silent second mortgage.  The funds come from the 
regional Federal Home Loan Banks.  Your lender must apply for funds on your 
behalf. 

These programs all have limited funding and are likely to have less funds 
in the future.  They also generally have some strings attached.  HOME, 
CDBG and AHP are limited to households earning less than 80% of the 
local median income adjusted for household size.  MCCs can go up to 120% 
of the local or state median, whichever is higher. 

Check with your city, county and state housing and/or community 
development agency for additional information.  Many state and larger 
cities and counties have other programs as well.

I hope this information is helpful.


Gerald L. Rioux (rioux [at] oro.net)
HCD Services
15313 Sierra Star Lane
Grass Valley, CA  95949
(916) 272-6751; FAX (916) 272-5463