When people can live and work in their community, our lives are healthier richer and happier. But many people seeking homeownership are faced with a choice: save for years, if not decades, to buy a home in their community or uproot their family and face the burden of living far from work.
But cities sometimes establish home purchase programs so buyers whose incomes fall below a certain threshold can buy a home priced lower than market rate. The City of Santa Clara, which has operated a Below Market Purchase (BMP) program since 1995, can help workers in the city by making it possible to live close to their jobs and become homeowners with manageable monthly payments.
Notifications to Clients About No In-Person Meetings
Out of an abundance of caution, Housing Trust Silicon Valley will not be taking in-person meetings at this time. Following guidance by the County of Santa Clara Public Health Department, we are doing our part to help slow the spread of COVID-19 by minimizing close contact with people. We will be available to communicate with you via phone and email… read more here
How is owning a BMP different?
With BMP ownership comes great benefits and unique responsibilities. For example, BMP owners must notify the City when they want to move, sell or refinance the house. If you are considering BMP ownership, be sure to review the sample BMP note, deed of trust, and covenants – these documents will give more detail on BMP ownership responsibilities.
How to get Started
Review Program Requirements and Complete a BMP Online Intake form
- 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.
- As you complete the Intake Form you will be asked to provide proof that you and any adult Co-Applicants (who are co-borrowers or non-borrowing spouses) attended the required City of Santa Clara BMP Orientation & Application Workshop by filling-out the date of attendance in the Intake Form.
- And, you will be asked to provide proof that you and any adult Co-Applicants (who are co-borrowers or non-borrowing spouses) attended a HUD-Certified 8 Hour Homebuyer Education Class through Project Sentinel by filling-out the date of attendance in the Intake Form and by attaching your Certificate of Completion(s).
- Both the workshop and class are required. If you have not attended the workshop and class, see Step 2 below.
- 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.
Attend the City of Santa Clara BMP Orientation & Application Workshop and a HUD-Certified 8 Hour Homebuyer Education Class
Attending the City of Santa Clara’s BMP Orientation & Application workshop and a HUD-certified 8 Hour Homebuyer Education class are required for any adult household members on the loan or the title (any Co-applicants/co-borrowers or non-borrowing spouses). The schedule for the required BMP Orientation & Application workshop is available in the Homeownership Calendar. The schedule for the required HUD-certified 8 Hour Homebuyer Education class is available through the Project Sentinel website. Both the workshop and class are required prior to referral to a Lender and prior to submission of a BMP Application.
- City of Santa Clara 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 firstname.lastname@example.org for questions.
- HUD-certified 8 hour Homebuyer Education Class – This required class, taken online or in-person from from a designated agency, helps homebuyers understand the steps to homeownership. For registration please visit Project Sentinel. If you have questions email email@example.com or call 408-470-3732.
Next Steps – Applying for a House During an Open Application Period
Now that you have completed steps 1 and 2 and have determined your household meets the eligibility requirements then:
- Upon notification of an upcoming Open Application Period for a BMP unit-Email firstname.lastname@example.org for re-evaluation and completion of pre-qualifying. If posted, an Open Application Period can be found on the Homebuyer Calendar.
- If applicants meet pre-qualification requirements, the applicants are referred to approved BMP lenders for first mortgage loan pre-approval. Remember the BMP Lenders require at least 3-5 days (will vary) upon receipt of ALL documentation to complete the pre-approval.
- After receiving the lender pre-approval, the applicants will contact email@example.com for an appointment to submit the eligibility application and all required documents. Applicants can only submit an eligibility application during an Open Application Period.
- Most developments are under construction and site visits are only arranged for approved BMP designated buyers and alternate back-up buyers. Applicants are encouraged to drive-by the new development, preview the builder/developer’s website and model homes, if available. A list of upcoming BMP units is posted, if available.
After complete review of eligibility application and documents, Program Eligibility is determined, Priority Level Criteria is applied, and the applicants are notified of ranking, lottery status and property availability.
To apply for the City of Santa Clara BMP:
- You have to be a first time homebuyer and
- Your household income, including all adults, must fall within the yearly gross household income limits for the BMP home.
- You need to follow the steps (above) 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).
- You must owner occupy your BMP home.
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.