American Dream Downpayment Assistance Initiative (ADDI)
NOTICE OF NEW AMERICAN DREAM DOWNPAYMENT INITIATIVE
(ADDI) DOWNPAYMENT FUNDS FOR BELOW MARKET RATE (BMR) UNITS
The Mayor's Office of Housing and Community Development is pleased to announce that limited downpayment assistance is now available for ownership units within the Mayor's Office of Housing and Community Development Below Market Rate (BMR) Housing Program through the American Dream Downpayment Initiative (ADDI) Program. Funding for this program is made possible by the Department of Housing and Urban Development (HUD).
A BMR ADDI applicant must work through a BMR participating lender who is also certified to provide downpayment assistance loans and the Mortgage Credit Certificate (MCC) Program through our office. The participating lender list can be found by clicking here.
ADDI LOAN QUALIFICATION
To qualify for an ADDI loan, an applicant must:
- Be approved to purchase a BMR unit by the Mayor's Office of Housing and Community Development
- Be a first time homebuyer under the rules of the BMR program
- Complete homeownership counseling at a MOHCD approved agency
- Have a commitment from a first mortgage lender
- Demonstrate the need for assistance in purchasing the BMR unit (as determined by MOHCD)
- Be within the required income limits
ADDI LOANS TERMS
- Require no monthly payments
- Accrue no interest
- Are due in full at the end of 30 years PLUS a share of the appreciation on the unit proportional to original percentage of the loan
- Are pre-payable at any time with no penalty (must be paid in full plus share of appreciation)
- Are up to a maximum amount of $10,000 or 6% of the purchase price (whichever is greater)
ADDITIONAL UNDERWRITING GUIDELINES
In addition to the requirements outlined above, the ADDI loan amounts will be determined as follows:
- Assistance is available to buyer households who make no more than the following maximum incomes (including the BMR asset test)
2015 HUD INCOME LIMITS
- The buyer household must provide at least a 5% down payment from the buyer's own funds.
- As a general guideline, our office will issue a ADDI loan only if the buyer's housing expenses are higher than 28% of income before the loan is incorporated.
- With the assistance of the ADDI program, BMR buyers must carry a first mortgage loan that equals at least 28% of the household's annual gross income and no more than 43% of the household's total debt.
- The ADDI may be used to lower a buyer's housing costs only, and may not be used to offset other consumer debt. The ADDI may be used to lower the buyer's housing costs to 28% of income and no lower.
- Buyers must retain no more than $25,000 in liquid assets after using the ADDI product.
- The actual amount granted to a buyer household is subject to MOHCD's review and discretion.
- The ADDI must be used in conjunction with a first mortgage.
- The buyer's primary mortgage will take first place in lien priority order; the BMR lien will take second place (this is the difference between the fair market value and the restricted BMR value); the ADDI will take 3rd place; and all other loans must follow.
HOW TO OBTAIN AN ADDI LOAN
Buyers must work through a participating BMR lender to obtain a ADDI loan. The current list of participating BMR lenders can be found here.
HOW TO BECOME A BMR PARTICIPATING LENDER
All lenders who work with BMR buyers must:
- Be certified as BMR lenders through our office
- Be certified as market rate Downpayment Loan Assistance (DALP) Program lenders through our office; and
- Be certified as Mortgage Credit Certificate (MCC) lenders through our office. To sign up for the BMR, DALP and MCC trainings, please contact Sonia McDaniel at firstname.lastname@example.org.
For more information, please refer to the BMR webpage or call 415-701-5500.
FORMS & DOCUMENTS
ADDI Application, Lender Certification and Transmittal Form (Word) - This form is to be completed by approved lenders only. (Tip! Save to your own computer before completing this form.)