The City Commission voted Wednesday to revise the replacement housing program so mortgage assistance provided through community development funds will be capped at 45% of a home's sale price, staff said. The change was approved unanimously.

Staff explained the change is intended to reduce the city's exposure after rising home values in recent years increased the amount of mortgage assistance required when replacement homes were sold. Under the prior policy, buyers were required to take out a minimum first mortgage (staff cited a prior $120,000 minimum), and the difference between that first mortgage and the sale price could be filled with mortgage assistance paid from Community Development Block Grant (CDBG) and HOME program funds. Staff said recent sales required more assistance than the homeowner's first mortgage, straining available funds.

Under the revision, staff said no more than 45% of a home's sale price may come from mortgage assistance. "So the... buyer of the home would have to have at least 55% equity into the home then," staff said during the discussion. Staff also said the program will continue to use a third mortgage that is forgivable over 15 years; the staff memo referenced the figure $2,525,000 in connection with that third mortgage.

Commissioner Lee asked about potential effects on buyers' ability to purchase replacement homes. Staff noted that U.S. Department of Housing and Urban Development (HUD) rules require that mortgage, taxes and insurance be no more than 30% of a buyer's gross monthly income, which could limit how much first mortgage buyers can take and, in turn, affect affordability. Staff said recent buyers brought large down payments and some were far below the 30% threshold, but acknowledged the change could exclude some prospective buyers.

Council member Goggins moved to approve the change; Commissioner Lee seconded. Commissioners voted unanimously to adopt the update.

Staff did not specify how many potential buyers might be affected; they said ongoing demand for replacement homes remains strong and that the change is intended to reduce program risk and preserve limited CDBG and HOME funds.