New Requirements for
GMHF Single-Family Financing
This page outlines GMHF’s new policy for single-family financing that will limit GMHF gap loans to families with children. The 2004 Income Limits and Acquisition Cost Limits (previously known as TDC) are also referenced. Please review this carefully and contact GMHF with any questions at 800.277.2258 or 651.221.1997. You can also reach the program officer assigned to your project at:
Jeremy LaCroix, jlacroix@gmhf.com
Amy McCulloch, amcculloch@gmhf.com
Stephanie Omersa Vergin, svergin@gmhf.com
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Read the background on why homeownership is especially important to families with children.
Summary of Program Changes
1. GMHF Single-Family and BBN Homebuyer Gap Loans
- Loans will be restricted to income-qualified households with one or more dependent children.
- GMHF homebuyer gap loans may now be layered with other homebuyer subsidies (CRV, DEED/Small Cities, Homesteps, etc). As a result, the lowest income families may have access to $35-$40,000 of gap loan funds, plus subsidized first mortgage rates and additional gap funds provided by MHFA through local lenders.
- For 2004, GMHF replaced Total Development Cost (TDC) limits with Acquisition Cost Limits (ACL) for single-family homes receiving GMHF interim and/or homebuyer gap financing (see attachment). These adjusted limits, combined with layering of gap funds, will allow larger families to finish additional space they need while maintaining affordability.
- Income limits (new 2004 income limits attached), loan terms (0%, 30-year, deferred), and all other underwriting criteria will remain the same. Gap loans will continue to be need-based with a maximum loan amount of $15,000.
2. GMHF Single-Family and BBN Interim Loans
- Because GMHF will put out interim funds before homebuyer families are identified, strong consideration will be given to applications that have marketing and outreach plans targeting families with children.
- GMHF will expect that at least 50% of homes built using GMHF interim funds will be sold to families with children, whether or not homebuyer gap funds are eventually used by buyers.
- Loan terms (typically 2%, 3-year term, deferred) will remain the same.
3. GMHF Employer-Assisted Housing (EAH) Program for Single-Family and BBN Developments
- Exceptions to the families with children restriction may be negotiated if there is employer involvement. However, to make an exception, employer contributions to homebuyers must be substantial and permanent.
- There will be no changes to the EAH Downpayment Assistance Program. GMHF will continue to match employer funds 1:1 up to $2,500 per homebuyer with no restrictions on household composition.
Phasing of New Program Requirements
1. Existing Funding Awards: Beginning now, developers with existing, unused gap loan awards are strongly encouraged to target funds to families with children. Since more than 50% of awarded gap loan funds have yet to be disbursed, it is critical that we improve the targeting of those funds. However, funds will still be available to households even if they do not meet the new program guidelines provided the loan will close by December 31, 2004. Beginning January 1, 2005, all existing gap loan awards must be used only to serve income qualified families with children.
2. Spring 2004 RFP: Funding requests will be evaluated based on the developers’ commitment to target funds to income-qualified families with children. GMHF will work with developers who receive funding to set targets for program performance.
3. Fall 2004 RFP: Beginning with the Fall 2004 RFP, all gap loan funds awarded to developers must be used to serve only income-qualified families with children. Interim loan requests will be evaluated based on the applicant’s marketing/outreach plan, and GMHF will expect that a majority of housing units constructed with GMHF interim loan funds be sold to families with children (whether or not GMHF homebuyer gap loan funds are used).
GMHF Focus Group
On January 15, 2004, GMHF convened a Focus Group of local affordable housing developers and administrators to discuss a set of stated goals to better serve low-income families with children, especially through homeownership programs. Many alternative program strategies were discussed, and the Focus Group ultimately determined that an affordable housing program that targets families with children is strategically important, especially given the increasingly limited resources with which local organizations and funders have to work. The Focus Group also expressed an interest in convening in 2004 to share best practices on effective outreach efforts to low-income families with children.