Council standardizes soft-second homebuyer loans, expanding deferred second loans for low-income buyers

The City Council voted 12-0 to standardize the city's deferred second-loan programs for first-time homebuyers and rehabilitation purchases, increasing the maximums to improve affordability for households earning up to 80% of area median income.

City staff described the change as standardizing the soft-second program "at $60,000" for purchase loans and "$75,000" for home-rehab loans, both structured as deferred, zero-interest second mortgages that remain on the deed until sale. Department staff said these programs are funded with federal HOME program funds and are intended to complement, not replace, local housing-trust-fund efforts to generate new local subsidy.

Councilmember John Holden questioned the size and source of the city's broader affordable-housing contribution and whether the program would significantly increase homeownership in higher-priced neighborhoods; housing staff said the program targets households at or below 80% of median income and noted the program had previously closed roughly 100 loans per year under earlier, smaller maximums. Councilmember Richard Pacheco said the trust fund effort is intended to generate local funds that complement HOME program money rather than double-counting federal funding.

Staff said they have not yet commenced broad marketing of the revised program and expect significantly greater demand once it is announced. The council approved the item and asked staff about outreach, targeting and coordination with other programs such as asset-control-area strategies with HUD.