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Salinas creates down‑payment assistance program using $1.03M in PLHA funds to help 8–10 households
Summary
Council approved a first‑time homebuyer mortgage down‑payment assistance program using about $1,034,137 in PLHA funds, offering deferred loans up to $125,000 (3% simple interest, forgivable under conditions) to eligible Salinas residents; staff expects to submit guidelines to the state and launch in spring pending HCD approval.
The Salinas City Council voted unanimously Jan. 27 to establish a first‑time homebuyer mortgage down‑payment assistance program and to allocate approximately $1,034,137 in Permanent Local Housing Allocation (PLHA) funds from prior years.
Orlando Reyes, assistant director of community development, said the program is designed to support residents and applicants employed in the city who meet income and residency requirements. The proposed assistance would be a one‑time deferred loan with 3% simple interest (forgivable if the original borrower remains in the home for the loan term), up to $125,000 or 17% of the purchase price, whichever is less. Staff estimated the current allocation could assist roughly 8 to 10 households and that HCD authorization of program guidelines is required prior to launch.
Key eligibility features discussed included: established city residency (staff said residency is verified by lease, utility bills or equivalent documentation and generally reflects two years), income limits (up to 150% of area median income as drafted), mandatory HUD‑approved 8‑hour homebuyer education, and that applicants need a senior lender pre‑approval (the program relies on a primary lender to underwrite the senior loan). Staff acknowledged that applicants who lack a Social Security number could still participate if they can secure a senior lender willing to underwrite an ITIN‑based mortgage.
Council members and the public pressed staff on program mechanics, portability and whether the fund could be structured as a revolving loan. Reyes said principal repayments would return to the city loan account and that staff will explore longer‑term structures as the program matures. Staff anticipates submitting the guidelines to the state by Jan. 31 and tentatively launching the program in spring if HCD approves.
Council moved and approved the three recommended actions: establish the program, allocate the 2021–2022 PLHA funds, and authorize the city manager to finalize program implementation documents.
