Payment loan

A little help: Down payment loan programs help locals enter the market

Real estate companies, mortgage companies and securities companies are working on ways to close deals that don’t require people to meet in conference rooms. Photo by Tierra Mallorca on Unsplash.
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Editor’s Note: This story is part four in a five-day series focusing on housing issues in the Vail Valley. To see the whole series as it unfolds, visit

EAGLE COUNTY – Nicholle Jackson has been very busy the past few years. It means people are buying houses.

Jackson is a broker at the valley house store, the county’s workforce housing clearinghouse. Jackson and others at the Home Store are working with potential buyers trying to buy a home.

Although it is more difficult to qualify for a mortgage than in 2007, loans are more available than in 2010. But Home Store has a powerful tool to get people to return home: the Eagle County. Down Payment Assistance Program.

This program provides loans of up to $ 15,000 to eligible buyers. If a buyer has $ 7,500 to invest in the purchase of a home, that buyer can borrow up to an additional $ 15,000 from the program. The ratio is one part of the buyer’s funds, two parts of the loan assistance. This means that a person with $ 5,000 could be eligible for a down payment assistance loan of $ 10,000.

These loans expire either in 15 years or upon the sale of real estate. If a property appreciates 10% during this period, the borrower repays the loan amount plus 10%. If a home loses value between buying and selling, only the principal is owed.

The program has been popular over the past two years, with 50 loans taken out in 2018 and 46 more this year as of December 2.

Funding for the program is provided by a combination of grants and repayments from past borrowers. Jackson said Eagle County for 2019 provided a matching grant of $ 250,000. Donors, including local banks, cities and employers, matched that amount.

Is $ 15,000 enough?

The down payment loan program works if borrowers find a mortgage that doesn’t require the old standard of a 20% down payment.

This norm reappeared following the national economic downturn that began in 2008. This downturn was fueled in large part by mortgage defaults after years of easy money. For a while, borrowers could get mortgages without a down payment. Many of these borrowers have not been able to keep up with their payments, leading to a wave of foreclosures and “short sales” – which are sales negotiated with lenders to sell a home for a. price lower than amount due.

Short sales and foreclosures at some point in the early years of this decade made up a significant percentage of all sales. In 2010, over 600 county homeowners lost their homes to foreclosure.

Under the shock of the financial crisis, credit standards tightened at the same time, reminiscent of the old half-joke of the 1970s: The only people who could qualify for loans were those who didn’t.

In today’s environment, lending standards are even stricter than they were a dozen years ago. But, Jackson said, there are mortgages available for 3%, 5%, or even no down payment. But loans without a down payment can exclude a borrower from other programs.

On a $ 300,000 home, a 3% down payment is $ 9,000, not including closing costs and other fees. A 20% down payment amounts to $ 60,000.

Liz Andrews, owner of Eagle-based All Western Mortgage, said she is working with many first-time buyers. Most are able to qualify for mortgages with low down payments.

Andrews said she has been successful in securing mortgages from people with relatively low credit scores, albeit with higher rates than those available to buyers with better credit.

“If you’re paying $ 2,200 a month for rent, there’s no reason (not to buy),” she said.

Of course, finding a home in this price range can be difficult, in large part because of the offer.

Bill Holm is a broker at Fortius Realty. This company is currently completing the Two Rivers project in Dotsero.

Holm said he doesn’t lose a lot of buyers because they can’t qualify for a mortgage.

Are you serious?

“People who are serious about this can come in,” he said.

But people serious enough about a house in Two Rivers must be serious enough to wait. At this point, there’s about a six-month wait to move into a new unit there, Holm said.

But six months can be useful, he added. The wait gives people time to save a little more on closing costs or to sort out credit repair issues.

On the other hand, Two Rivers is about to be built. Holm said the project is in its final stages. Only about 20 houses are unfinished out of a total of 260 units. The final units could be in place by the end of 2020.

Inventory has always been the problem for first- and mid-range homes. We are building more, but there is still a big gap between supply and demand. A 2018 Eagle County housing survey showed immediate demand for more than 2,700 units of all kinds.

Still, for those who can find a home, there are ways to buy. Jimmy Brenner of Blue Sky Mortgage said mortgages can be hard to come by for self-employed people or serial entrepreneurs.

Yet there are lenders.

“The loan is more accessible to people these days,” said Holm. Between down payment assistance programs and fixed rate mortgages available at less than 4% interest, there are opportunities.

These programs are opening up the mortgage market “to people who couldn’t afford it two years ago,” Holm said.

Vail Daily Business Editor-in-Chief Scott Miller can be reached at [email protected] or 970-748-2930.

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