San Jose proposes changes to historic home buyer loan program for equity realignment

San Jose City Council is taking significant steps to revitalize a dormant home buyer loan program aimed at expanding homeownership opportunities for lower-income residents. During the April 8, 2025, meeting, city officials discussed the program's historical context and proposed changes to better align it with current goals of racial and social equity.

Originally initiated over 30 years ago, the program provided first-time homebuyers with access to affordable housing. However, it became inactive about a decade ago due to a lack of policies and procedures. Recently, property owners have approached the city seeking to term out of their 30-year mortgages, prompting a reevaluation of the program.

City representatives highlighted that the program has impacted approximately 438 loans, totaling over $30 million in funding, with an average loan amount of around $70,000. The homes involved are primarily small condominiums, reflecting the program's original design to assist lower-income families in achieving homeownership.

One of the key proposals discussed was to reduce the city's equity share from 30% to 15% at the time of sale. This change aims to provide more financial relief to homeowners, allowing them to retain a larger portion of their earned equity. The council emphasized the importance of creating a clear policy that supports families while also addressing the city's financial interests.

As the council moves forward, the proposed adjustments to the home buyer loan program are expected to enhance access to homeownership for many residents, particularly those who have historically faced barriers. The city aims to implement these changes in a way that reflects modern values and supports the community's diverse needs.