Finding affordable housing can be challenging, especially for first-time homebuyers. If you’re searching for “Down Payment Car Assistance Programs Near Me,” you might also be interested in programs that make homeownership more accessible. While this article focuses on housing, understanding down payment assistance for homes can be incredibly valuable. The City of Portland offers a Down Payment Assistance Loan (DPAL) program designed to help eligible first-time homebuyers purchase a home within Portland city limits. This program provides crucial financial support to make homeownership a reality.
The Down Payment Assistance Loan acts as a second mortgage, provided by the Portland Housing Bureau (PHB). It works in conjunction with a primary mortgage from a participating lender, offering a significant boost to your purchasing power. PHB collaborates with local community partners to connect with and select eligible households for this impactful program.
To begin your journey towards homeownership with the DPAL program, connecting with a community partner is your first step. These organizations are your key resource in navigating the application process and understanding if you qualify.
Community Partners for Down Payment Assistance in Portland
The Portland Housing Bureau partners with several community organizations who play a vital role in identifying and guiding eligible applicants through the Down Payment Assistance Loan program. These partners are your local experts and point of contact.
To explore your eligibility and get started with the DPAL program, reach out to one of these community partners:
[List of Community Partners – This section would ideally list the partners mentioned in the original article, but since they are not explicitly listed, I will omit this list for now, focusing on the program details. In a real-world scenario, this list would be crucial and directly copied/linked from the original.]
In addition to these partners, PHB also collaborates with agencies offering comprehensive homebuyer counseling, education, and broader homeownership assistance. These resources can provide invaluable support throughout your home buying process.
Understanding Eligibility and Loan Terms
Navigating the specifics of any assistance program requires understanding the eligibility criteria and the terms of the loan. The DPAL program has clear guidelines to ensure it reaches those who need it most and is sustainable for the community.
Who Can Apply? Eligible Homebuyers
To be considered eligible for the Down Payment Assistance Loan, you must meet several key requirements:
- Counseling is Key: You need to be actively working with a Homebuying Counselor from one of the PHB’s Community Partners. This counselor will assess your financial readiness for a mortgage and guide you through the program.
- First-Time Homebuyer Definition: This program is designed for first-time homebuyers, defined as individuals who have not owned a home in the past three years. This ensures the assistance reaches those truly entering the housing market.
- Income Limits: Household income must be at or below 100% of Portland’s Area Median Income (AMI), adjusted for family size. In some cases, depending on funding sources or the size of the home, the income limit may be set lower, at or below 80% AMI. Your Homebuying Counselor will confirm the specific income limit applicable to your situation. You can Find out your estimated AMI to get a general idea.
- Mortgage Ready: You must meet the financial requirements of a first mortgage lender. The DPAL is a second mortgage and relies on your ability to secure primary financing.
- Liquid Assets Limit: At the time of closing, your combined liquid assets (cash, checking/savings accounts, CDs, etc.) cannot exceed $10,000. Any liquid assets above this limit must be used towards the home purchase, demonstrating a commitment of your own funds.
- Citizenship or Legal Residency: Applicants must be US citizens or legal residents to be eligible for this public assistance program.
- Homebuyer Education: Completing a US Department of Housing and Urban Development (HUD) approved homebuyer education class is mandatory. This education equips you with the knowledge and skills for successful homeownership.
- Minimum Borrower Investment: You must contribute a minimum of $500 of your own funds towards the purchase. Gift funds are permitted to contribute to this minimum investment.
- ICURA Specific Requirement: For homes in the Interstate Corridor Urban Renewal Area (ICURA), applicants must also participate in the N/NE Homeownership Preference Policy. Learn more about the N/NE Preference Policy if you are interested in this area.
Property Eligibility: Where Can You Buy?
The DPAL program also has specific requirements regarding the type and location of property you can purchase:
- Portland City Limits: The residential property must be located within the City Limits of Portland. The specific funding source for your DPAL may further define the eligible locations within the city. Homes in the Interstate Corridor Urban Renewal Area (ICURA) are subject to the N/NE Homeownership Preference Policy.
- Single-Family Units: Eligible properties are limited to single-family units, including existing condominiums and townhomes. This focus is on individual homeownership.
- Short Sale Limitations: Short sales are generally not eligible unless the buyer can prove all lien holders have agreed to the sale price and closing can occur within a standard timeframe (typically 30-45 days). This is due to the complexities and timelines often associated with short sales.
Alt text: Download link for DPAL Lender Credit Packet List PDF document. Text on the image reads “Download PDF file DPAL Lender Credit Packet List 145.81 KB”
Loan Terms: What to Expect
Understanding the loan terms is crucial for long-term financial planning. The DPAL program offers very favorable terms to make homeownership sustainable.
- Loan Amounts: DPAL awards can range from $80,000 to $100,000, depending on the funding source and the location of the home. This substantial assistance can significantly reduce the upfront costs of buying a home.
- Importantly, depending on the funding, a minimum of 10% of the DPAL award is set aside as a grant specifically for post-purchase Home Improvement. This provides additional support for maintaining and improving your new home. (More details on the Home Improvement Grant Fund are below.)
- Loan Term: The loan term is 30 years, providing long-term stability and predictable repayment structure.
- Interest and APR: The DPAL features a 0.00% annual interest rate, with a very low Annual Percentage Rate (APR) of 0.012%. This essentially means you are receiving an interest-free loan, making it incredibly affordable.
- Deferred Payments: Payments are deferred for the entire 30-year term. The full principal balance becomes due only upon the sale of the home, refinance of the first mortgage, or when the property is no longer your primary residence. This deferred payment structure greatly eases the initial financial burden of homeownership.
- First Mortgage Requirement: The DPAL must be used in conjunction with a first mortgage loan obtained from a participating lender. This ensures responsible and sustainable financing.
- Second Lien Position: The DPAL loan is secured by the purchased property with a lien in no lower than second position. This is standard practice for second mortgages.
- Fees: A $500 origination fee applies, along with other standard third-party closing costs associated with any mortgage.
Loan Forgiveness: Long-Term Benefits
A significant benefit of the DPAL program is the option of loan forgiveness, rewarding long-term homeownership and stability. Loan forgiveness begins after the 15th anniversary of the loan.
- 15-Year Forgiveness: Fifty percent (50%) of the original loan amount is forgiven on the 15th anniversary of the loan. This substantial forgiveness reduces your long-term debt significantly.
- Annual Forgiveness (Years 16-29): Starting in year 16 and continuing until year 29, three percent (3%) of the original loan amount is forgiven annually on the loan anniversary date. This provides a steady and predictable reduction of the loan balance over time.
- Full Forgiveness at Year 30: At the end of the 30-year term, any remaining balance of the DPAL is completely forgiven. This means if you remain in your home for 30 years, you will not have to repay the loan.
Eligibility for Loan Forgiveness: Staying on Track
To be eligible for these loan forgiveness benefits, homebuyers must:
- Maintain Primary Residence: Continuously occupy the home securing the DPAL second lien as their primary residence throughout the loan term. This ensures the program benefits long-term residents and communities.
- Loan Compliance: Maintain compliance with all terms of the loan note, including consistently maintaining homeowner’s insurance on the property. This protects both the homeowner and the lender.
Home Improvement Grant Fund: Investing in Your Home
As mentioned earlier, a portion of the DPAL award is designated for a Home Improvement Grant Fund. This fund provides direct financial assistance for improving your home after purchase.
- Grant Amount: 10% of the DPAL award is granted to the homebuyer and deposited into a Home Improvement Grant Fund managed by PHB. Disbursements from this fund are subject to PHB approval to ensure funds are used for eligible improvements.
- Eligible Improvements: Grant funds must be used for eligible home improvements within six months of loan closing. This encourages timely investment in the property.
- No Post-Grant Inspections: Once the Home Improvement Grant Fund is fully disbursed and closed, no further property inspections are required related to these grant funds.
How to Apply for Down Payment Assistance
If you believe you meet the eligibility criteria and are ready to take the next step towards homeownership in Portland, the application process is straightforward.
To learn the detailed steps on how to apply for a Down Payment Assistance Loan, please visit the How to Apply page. This page will provide you with a comprehensive guide to the application process.
Questions? Get in Touch
For any questions or to get personalized guidance, the best approach is to contact one of the four DPAL Community Partners. Schedule an appointment with a homebuyer counselor at one of these partner organizations. They can provide an initial qualification assessment and thoroughly explain all program requirements, helping you determine if the DPAL program is the right fit for you.
Information for Lenders
For lending professionals seeking detailed information about partnering with the DPAL program, you can Download PDF fileDPAL Lender Credit Packet List . This document provides essential credit packet information for lenders participating in the Down Payment Assistance Loan program.
