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What is a BMP Program?
California cities establish home purchase programs, often called Below Market Purchase (BMP) to allow buyers whose incomes fall below a certain threshold to buy a home they would likely be able to afford if it was selling for market rate. Buying a BMP home would also mean lower monthly payments for the homeowner.
The City of Santa Clara has operated a BMP Program since 1995, assisting low- and moderate-income families achieve the goal of homeownership. The program also helps facilitate the inclusionary housing requirements mandating housing developers make a percentage of housing units in new residential developments available to low- and moderate-income households.
What Criteria Is Needed Before Applying?
To apply for the City of Santa Clara BMP you have to be a first-time homebuyer and your household must fall within the yearly gross household income limits for the BMP home. Prospective applicants must follow the steps (below) prior to obtaining a pre-approval from an approved BMP lender. You must be prepared to show the funds available for down payment and closing costs (lenders may require a minimum of 5% down and some units may require more). A BMP home must be owner occupied.
What are the restrictions if I purchase a BMP home?
You must agree to the resale restrictions for BMP home according to the terms and conditions of the agreement which includes the repayment terms for the City’s BMP loan (the difference of the Initial Market Value determined at purchase and the original BMP Sales Price of the home). As a BMP homeowner, you must notify the City of any upcoming changes not limited to residency, title vesting, resale or refinance of the home and subsequently receive City approval. For additional terms, conditions and restrictions, review the sample BMP note, deed of trust, and covenants.
What are the Steps?
Click on each step below
- Step 1 - Review Program Requirements and Complete a BMP Online Intake form
- Step 2. Attend the City of Santa Clara BMP Orientation & Application Workshop and a HUD-Certified 8 Hour Homebuyer Education Class
- Step 3. Next Steps - Applying for a Unit During an Open Application Period
- Review the City of Santa Clara BMP Guidelines Handbook, Eligibility Application and its Checklist of Required Documents. You must be able to provide all required documents and meet all program eligibility requirements including the Occupancy Standards and not exceed the Maximum Income Limit for the development and unit.
- Complete a City of Santa Clara BMP online intake form. This is NOT an application; it is only for pre-screening and does not place you on any wait list. Send the completed form to firstname.lastname@example.org
- Applicants must have their own funds for down payment and closing costs. Lender may require additional down payment from applicants to qualify for the first mortgage loan.
Attending the City of Santa Clara’s Below Market Purchase Program (BMP) Orientation & Application workshop and a HUD-certified 8 Hour Homebuyer Education class are required for anyone on the loan or the title (any co-applicants/co-borrowers or non-borrowing spouses). Workshops and classes are scheduled on the Homeownership Calendar and may be taken in any order.
- City of Santa Clara Below Market Purchase Program (BMP) Orientation & Application Workshop This required workshop provides a description of the BMP program, discusses the eligibility requirements, reviews the Eligibility Application and the steps to apply for the program. See our Homeownership Calendar for the schedule and registration instructions – and contact Housing Trust at email@example.com for questions.
- HUD-certified 8 hour Homebuyer Education Class This required class helps homebuyers understand the steps to homeownership. For registration please visit Project Sentinel (www.housing.org). If you have questions email firstname.lastname@example.org or by phone at 408-470-3732.
Other Important Information
There are no Broker or Realtor Incentives for “New Construction” Below Market Purchase Units in the City of Santa Clara.
The approved BMP homebuyer will sign to a 20-year Promissory Note for the difference of the home’s appraised unrestricted Initial Market Value (IMV) and the restricted Affordable Sales Price (ASP) when the BMP home is initially sold. The Promissory Note is secured by a Deed of Trust and Security Agreement which creates a lien on the home. The approved BMP homebuyer will also execute the Below Market Purchase Covenants, Restrictions and Option to Purchase document. This document enforces the following resale restrictions to ensure the property remains affordable.
- Year 1 through Year 5 of ownership: A BMP homeowner who decides to sell their home within this time period must sell to an eligible BMP-qualified, new buyer (a first-time buyer with an income not exceeding 120% of area median income) at a re-established restricted resale. The principal amount of the City Loan is forgiven and a new principal amount of the City Loan is established for the new homeowner.
- Year 6 through Year 20 of ownership: A BMP homeowner can resell their home to whomever they choose at the current, unrestricted fair-market The BMP homeowner will pay off the principal amount of the City Loan at the sale of the home. The BMP homeowner must also pay a share of the increase in equity in the home to the City.
- Year 21 and after of ownership: The BMP homeowner is required to pay back the principal of the City Loan and is able to realize all of the market-driven appreciation in the home above its Initial Market Value (IMV). Resale restrictions expire and the BMP homeowner is no longer required to pay the City a share in the increase in equity in the home.
Contact Housing Trust Silicon Valley (HTSV) for additional information or inquiries. Homeownership Programs Department * Housing Trust Silicon Valley * 408-436-3450 ext. 303 * email@example.com