Covington to Increase Amount Awarded in Homebuyer Assistance Program
The City of Covington is set increase the amount of money that it awards to qualifying homebuyers.
On Tuesday night, the city commission is expected to approve an increase in the Homebuyer Assistance Program from $5,000 to $7,500.
Just over three hundred homebuyers in the city benefited from the program over the past six years.
"What with a down payment and closing costs, many of the families we help would have to wait a long time to build up their savings before they could afford a home," said John Hammons, coordinators of the program at the City of Covington. "But the city helps them buy their home much sooner."
Hammons created a map, shown above, to show the Covington city commission what he sees as the effectiveness of the program and to build support for the proposed increase.
The item is on the commission's consent agenda, which typically involves swift approval of a list of proposed ordinances and policies in one vote.
"This program has an incredible story," Mayor Joe Meyer said. "Essentially every week for the last six years, the city has helped a Covington family afford a new home, for many of them their very first. And as the map demonstrates clearly, we've done it in neighborhoods across the city."
The program is funded by the federal government and is deployed by the city to increase home ownership.
Applicants who meet income (currently $43,900 for a single person, $62,650 for a 4 person household) and credit requirements are given a five-year loan of up to $7,500 to be used toward a down payment, closing costs, settlement charges, and/or to "buy down" the interest rate on the primary mortgage.
The interest on the city's loan is 0 percent and payback is deferred. If the buyer lives in the house as their principal residence for five years, it's completely forgiven.
Applicants also complete a homebuyer education class to prepare them for the buying process and understand the long-term costs of owning a home.
The increase to $7,500 reflects changes in the federal program and the housing market itself over the last few years, Hammons said. The U.S. Department of Housing and Urban Development has raised the maximum income level under which applicants are eligible, and the average cost of houses has drastically increased across the board, he said.
"The city is responding to the facts on the ground - due to the booming housing market, homes are getting harder to afford for the low- to moderate-income families this program was designed to help," Hammons said. "By increasing the award, we can help them buy down their interest rate or put more money down, which helps create long-term affordability."
The program was averaging almost 60 forgivable loans a fiscal year before the pandemic hit, Hammons said.
"Now's a great time to buy with extremely low interest rates," he said.