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| Uncommon Sense | Help for high-end home-buyers
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Although she hasn't found a place yet, Carole could end up putting no money down. She will save between $3,500 and $15,000 in closing costs and other fees, a typical range for New York City, and her NACA mortgage payment will be $1,703 -- less than the $1,839 payment she'd pay at the current rate of 6.21%.
I was forest-green with envy, the color I might paint my new dining room. If I owned one. Which I don't.
But as relieved as Carole is to have taken this big step -- and start her apartment search -- she did encounter some hurdles:
- It's not your typical mortgage experience. Forget the idea of sitting down across a nice polished desk from your lender. NACA is more grassroots, Carole says, noting that the first meeting is usually in a big hall or church with about 200 other hopeful home-buyers.
- There's a cap on purchase price. The purchasing cap varies depending on your area, says Marks, but it's based on Federal Housing Authority limits, and "it's generally pretty high," he said. (Learn more here.)
- You may feel funny. As someone on the upper end of the income spectrum, Carole says it felt a tad awkward to be asking for help. But she got over it. "I just stayed focused on the advantages I would reap by being part of the program," she says.
What else is out there?
NACA plans to double its number of offices this year, according to Marks. And it's just one of a small but growing number of options open to middle-income home-buyers these days.
Some of these financial breaks come from low-cost loan programs like the one NACA operates, but in some cities and counties, developers are given incentives to build housing for a larger income range -- including those who earn as much as 120% of the local median income, says Retsinas of the Joint Center for Housing.
- The Boston Redevelopment Authority has issued building permits for 500 to 600 reduced-cost units, available to people with incomes 80% to 120% of the local median -- $82,600 for a family of four. A family earning up to $99,120 could qualify for a reduced-price condominium, says Geoffrey Lewis, assistant policy director for the BRA.
- In San Diego and Los Angeles, the Phoenix Realty Group has created two real-estate equity funds totaling $190 million to build about 4,000 workforce housing units in the next five years. In San Diego, they're targeting families making 80% to 200% of the median income, which translates to $50,000 to $126,000 a year.
While Conrad Egan, president of the National Housing Conference, cautions that most programs are designed to help people whose incomes fall below the median, he advised those at the median or above to look into such inclusionary housing programs, as these are called.
Although NACA has few restrictions on its loans or on the properties you can buy, other subsidized programs may have rules limiting the price you can ask when you sell your home.
Retsinas suggests starting with your state housing finance agency -- there are 49 of them listed on the National Council of State Housing Agencies' Web site.
Your local community-development corporation office is another good source for affordable-home programs in your area, he adds. You can also contact the Institute for Housing Innovation, a nonprofit that supports the development of mixed-income neighborhoods through reduced-cost homes for all income ranges.
And I would take a cue from Carole: Don't be shy. I know many people who think they can't afford to put a toe into some of these overpriced real-estate markets. Or who believe that they earn too much to qualify for assistance. But desperate times seem to have made for creative measures.
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