This article will give you some general information about Portland Development Commission’s (PDC) Down Payment Assistance Loan Program (DALP). If you are a qualified homebuyer, PDC will loan you a 20% down payment with no repayment obligation until you rent, sell or refinance your home. Here’s the deal:
1) You must be considered a “first time” homebuyer, which means that you cannot have owned a home in the past three years;
2) You must occupy the home;
3) Your annual household income must fall within the following guidelines:
Household Size 2 or Less Bedrooms
3 or More Bedrooms
1
$38,000 $47,250
2 $43,450 $54,000
3 $48,900 $60,750
4 $54,300 $67,500
Higher household income limits apply for households of five or more people;
5)
You must meet standard first mortgage financing criteria and work with either PDC or a participating lender for financing;
6) Your assets can’t exceed 6 months of your principal, interest, taxes and insurance;
7)
You must be a US citizen or legal resident;
You must purchase a single family residence in any of the five following PDC Urban Renewal Areas:
Downtown Waterfront
Interstate Corridor
Lents Town Center
River District
9) Your purchase price can’t exceed $418,750 (this cap may change after 12/31/08); and
10) You must renovate the home in a minimum amount of 5% of the purchase price within a six month to two year period, depending on which Renovation Option you choose. But, PDC will also loan you that 5% amount at the time of your purchase. So, the maximum amount PDC will loan you is 25% of your purchase price.
This loan acts as a silent second mortgage, except you have no obligation to pay a dime of it back until you rent, sell or refinance your home. At that time, you must repay the loan with 4% simple interest. If you live in the home for 30 years, the loan is forgiven!
Because there is no immediate repayment obligation, you now qualify for 20% more home than you would without this Down Payment Assistance Loan. Right now, interest rates are hovering around 5.5% to 5.75%, assuming good credit scores. For example, let’s say you can afford a payment of $1,200 per month (excluding taxes and insurance), this would ordinarily get you a home in the $205,000 price range. With the DPAL program, you can now purchase a home for $246,000, because you have no immediate payment obligation on the first $49,200 of your purchase! Without this program, your principal and interest payment on a $246,000 home at 5.75% interest would be $1,436, but now is only the $1,200.
The other benefit of this program is that because PDC is providing your 20% down payment, you are NOT required to have mortgage insurance. On a FHA loan for example, mortgage insurance premiums typically equal 1.5% of your loan amount up front and then .5% annually.
So, not paying mortgage insurance premiums will save you a significant amount of money.
Although this blog attempts to give you an overview of PDC’s Down Payment Assistance Loan program, PDC or one of its participating lenders will be able to provide you more detailed information on this exciting program. For more information on the DPAL program, you can click on this link: http://www.pdc.us/housing_services/programs/financial/down_payment_assistance_loan.asp or you can call PDC directly at 503-823-3400.
Here is a link of PDC’s participating lenders: http://www.pdc.us/pdf/housing_services/financial/mcc/ParticipatingMortgageCreditCertificateLenders%20English.pdf
The economy is bleak and the news report depressing, but Portland provides a quality of life that attracts huge in-migration. The statistics say it all:
Portland is anticipated to grow to
At this writing there are over 200 homes currently on the market in the eligible urban renewal districts for less than $250,000. You can chat with me on my blog or call me at any time if you have any questions about any facet of the home buying process.
