Once canceled in 2008, the LA Moderate Income Purchase Assistance Program began operation again in July 2017. Previously being underfunded, the MIPA is back with funding being restored. Before going into the details of the program and who’s eligible, note that that in a seller’s market such as this, it can sometimes be a challenge to get a seller willing to accept an offer with lower personal funds and a longer escrow – as this type of loan has additional inspection requirements and typically will take 45-60 days to close. If the funds are available through alternative methods, an offer might have a stronger chance of being accepted via more traditional lending.
More About The Program
The Moderate Income Purchase Assistance Program helps first-time, moderate-income homebuyers purchase homes by providing loans to cover the down payment, acquisition, and closing costs.
- First-time homebuyers who have not had an ownership interest in any real property at any time during the last three years.
- U.S. Citizens, lawful permanent residents, or other qualified aliens.
- Applicants whose total household income of all of the adults, 18 years of age or older who will be living in the home, is at or below the income limits.
The Amount Of Loan One Qualifies For
The numbers depend on your earnings and household size. The more you earn, the less assistance you would receive. For example, a family of four making 150 percent of the area median income could get a loan of up to $50,000. A family of four making less than $69,000 could get up to $90,000. (The loan cap for low-income families used to be $60,000 but the city and Neighborhood Housing Services have also partnered up to raise the ceiling).
- Applicants must attend an 8-hour Homebuyer Education Class given by one of the approved providers.
- Applicants must contribute a minimum of 1% of the home price from their own funds as down payment. Some homebuyers may be required to contribute more than 1% toward the down payment.
- Homebuyers must occupy the home as their principal residence
- If eligible, applicants who apply for this program may also be required to apply for the Mortgage Credit Certificate Program (MCC).
MIPA Loan Features
- Zero percent (0%) interest rate
- Deferred – requiring no monthly payments
- Shared appreciation provision in which the City will share a certain percentage of the appreciation in the
value of the property
- Loan and shared appreciation is due on sale, title transfer, first mortgage repayment, or in 30 years as a
MIPA Loan Terms
- Deferred, requiring no monthly payments
- Loans have a Shared Appreciation component in which the City will share a certain percentage of the appreciation in the value of the property. What this means – and it’s important to remember – is that all the equity in the home at the time of future sale will be split between the homeowner and the city… as a way the city can essentially earn ‘interest’ on their loan.
- Repayment is due on sale, title transfer, first mortgage repayment, or in 30 years
- Refinancing of the first mortgage is allowed under certain conditions
- One unit properties, i.e. single family residences including townhomes and condominiums.
- Properties must be located in the City of Los Angeles.
- No maximum purchase price limits.
- Properties cannot be occupied by tenants.
- Approved short sales/pays, foreclosed and REO properties and regular sales.
- All properties are inspected by the City to ensure they meet all applicable state and local housing standards and code requirements. We also conduct a Lead-Based Paint Visual Assessment on the property to identify deteriorated paint in the homes. All properties must pass the City inspection. Any required corrections or repairs on the property should be done at the cost of the owner or homebuyer and must be completed before the application for financial assistance is submitted.
A Simple Example Of How The Process Goes
The Low Income Purchase Assistance loan provides the difference between the purchase price plus closing costs (up to 5% of the sales price) and the amount of the buyer’s first mortgage loan, down payment and other funding sources.
How To Apply?
If you’d like a name of a reputable lender, please reach out! I’m happy to provide information for MIPA qualified lenders who can help give you the information on if you qualify and how to proceed.
If you’d like more information on the San Fernando Valley or Los Angeles, or to have help looking for your next home, please feel free to reach out! I’m happy to help, no obligation.