C&CH: Down Payment Zero-Interest Loan Program

Note: The following information was found on the City and County of Honolulu’s Department of Community Services website, accessed on 11/12/15.

The City and County of Honolulu’s Down Payment Loan Program is part of the City’s efforts to promote homeownership and create a strong community. Utilizing HOME Investment Partnership Act funds from the U.S. Department of Housing and Urban Development, this program provides a zero interest loan to qualified low- and moderate-income families to meet down payment requirements for home purchase.

Frequently Asked Questions (FAQs)

WHO MAY APPLY FOR THE CITY’S DOWN PAYMENT LOAN?
Prospective homebuyers who have not owned a residential property and whose annual household incomes are under the maximum income shown below:

Number in Household 2014 Annual Income*
1 $53,700
2  61,350
3  69,000
4  76,650
5  82,800
6  88,950
7  95,050
8 101,200
9 107,200
10 113,400

*These income limits are subject to periodic revision.

WHAT IS THE MAXIMUM LOAN AMOUNT THE HOMEBUYER MAY BORROW?
The loan limit is $40,000. Loans will be made on a first-come first-served basis subject to the availability of funds.

WHAT IS THE INTEREST RATE AND LOAN FEE?
The interest rate is 0% for all income-eligible borrowers. There is no loan fee.

WHAT KIND OF PROPERTIES MAY BE PURCHASED?
The property must be located on Oahu. The property must be a legally permitted structure meeting all local building codes. In addition, the property must pass a Housing Quality Standards inspection and meet other Federal requirements such as those governing Lead-Based Paint for homes built before 1978 and environmental reviews.

WHAT WILL BE THE MONTHLY PAYMENT?
The monthly payment will be based on a 20-year amortization term. Lower minimum loan payment amounts may be allowed for certain credit qualified borrowers.

IS THERE A HOMEBUYER EDUCATION REQUIREMENT?
Yes, all loan applicants must complete a City-approved homeowner education course prior to loan application.

ARE THERE LOAN RESTRICTIONS?
The borrower must be an owner-occupant at all times. Upon sale or other transfer of the property, unless the new owner is income-eligible, the borrower must pay the City a specified percentage of the loan balance, which percentage will be reduced for each full year of occupancy.

HOW DO I APPLY?
Step 1 – When applying for a loan from your first mortgage lender, be sure to inform the lender that you are interested in a down payment loan from the City.

Step 2 – After initial loan approval from your first mortgage lender, your lender will submit a loan file to the City for approval. You must complete homebuyer education prior to your loan file submission to the City.

For more information, go here.

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