Overview for Potential Homebuyers
Affordable Homeownership UnitsThe town offers affordable homeownership units which are available to homebuyers with incomes up to 120% of the current Mecklenburg County area median income. Please note that while some of these units are new construction, many are resale units. The affordable homes are similar to market-rate homes in that they are individually owned and require the buyer to qualify for a loan from a lender. Existing affordable homeownership units are located in the neighborhoods of Bailey Springs, Little Gate, The Brownstones at Harbour Place, Bradford, The Condos at South Main Square, The Villages at South Main Square, Davidson Bay, Summers Walk and Walnut Grove.
Down Payment AssistanceFor households that earn less than 120% of the area median income
I. Program Description
The Town of Davidson provides down payment assistance to income-qualified buyers who meet program guidelines. Lenders apply for the program on behalf of qualified buyers. The home must be in part of the town’s affordable housing inventory. The assistance is in the form of a no payment, no interest loan that is forgiven in increments during occupancy/ownership of the home. Persons who wish to receive assistance must attend an approved homebuyer education class, and the combined gross income of all household members must be at or below the following HUD area median income limits (exact income limit will depend on applicable property deed restrictions):
|Size of Household
||Median Income Limit
|Median Income Limit
II. Program Eligibility
- Combined projected assets of all parties on the loan, at the time of, cannot exceed 20% of the purchase price of the property. Cash assets include, but are not limited to: checking and savings accounts, certificates of deposit, earnest money deposit, gift funds, residential property assets, and cash on hand of all adult members. Individual retirement accounts or other similar retirement investments, attributed to the household that are less than $100,000 and to which access is limited or restricted, will not be considered cash assets.
- Combined gross annual income of all parties on the loan cannot exceed the income restriction provided in the deed restrictions for the property address. There are no exceptions to this rule.
- Property must be included in the Town of Davidson’s affordable housing inventory as indicated in applicable deed restrictions.
The funds can only be used to assist with the buyer’s down payment or closing costs. Costs that are normally associated with the seller are ineligible. If the Buyer has prepaid certain closing cost items such as the appraisal fee, credit report fee, or first year hazard insurance premium, the Closing Disclosure can show the buyer receiving cash reimbursement for such prepaid items as long as it does not exceed the amount prepaid.
V. Level of Assistance
Down payment assistance in the amount of $10,000 is available for qualifying buyers earning less than 80% of the current Mecklenburg County area median income. Down payment assistance is limited to $7,000 for buyers earning 80% to 120% AMI. Please note that there is a $50 lender processing fee that is paid by the buyer. Closing costs include the lender processing fee and document recording fees that are associated with the assistance. Down payment assistance from the Town of Davidson is in the form of a 5 year no interest declining loan and requires a written loan recapture agreement with the buyer.
Recapture is a mechanism for the Town of Davidson to recover all or a portion of the direct assistance if the buyer voluntarily or involuntarily (through a foreclosure) sells the house during the 5-year loan period. A note and the deed of trust will be taken in favor of the Town of Davidson for the amount of assistance. The amount of the loan will be forgiven on a declining, sliding scale basis for the time the buyer occupies the residence. For example, on a loan of $10,000, 20% will be forgiven the first year reducing the loan to $8,000, 20% will be forgiven he 2nd year reducing the loan to $6,000 and soon. If, at the end of 5 years, the home is owned and occupied by the buyer, the down payment assistance loan will be completely forgiven.
VII. Subordination Policy
The Town of Davidson will consider subordinating its homebuyer assistance mortgage to a position lower than a second in the following circumstances:
- If the homeowner is refinancing the original mortgage in order to obtain a lower interest rate and/or overall mortgage cost. To be eligible for subordination, a refinancing cannot result in any cash out to the homeowner.
- If the homeowner is borrowing money to make additional improvements to the property. Documentation must be provided to identify the type and cost of the improvement to be made.
- If the homeowner is securing a loan that includes funds for home improvements and for reasons other than home improvements (ex. Debt consolidation, medical expenses, vehicle purchase, etc.), the Town of Davidson will only consider subordination if a valuation of the property shows that the equity in the home is sufficient to cover the value of all mortgages against the property, and if the homeowner has been in the home for at least three years.
Loans will be offered through participating lenders and will be available on a first-come, first-serve basis. To request that funds be set aside for a particular applicant, a lender must submit a Request for Reservation of Funds. A Reservation Request must include:
- The Reservation Request
- A copy of the Certificate of Completion from the Homebuyer Education Program
- A copy of the loan application
This process will only reserve Home Buyer Assistance funds; it does not mean that the applicant has been approved to receive funds.IX. Documents
The Note, Deed of Trust and Deed Restrictions will be prepared by the Town of Davidson electronically sent to the closing attorney. The Town of Davidson will rely on the lender for notification of the date of closing. The Lender should allow 10 working days for the Note, Deed of Trust, Deed Restrictions and funds to be prepared.
The Home Buyer Assistance loan should be recorded in such a way that it is inferior only to the lender’s first mortgage. The recording fees for this mortgage can be paid from the Home Buyer Assistance funds.
Loan reservations and applications should be submitted to:
Eugene Bradley, Housing and Equity Director
Town of Davidson
216 South Main Street
P.O. Box 579
Documents and Forms
- Home Buyer Assistance Program Statement for Less 80% AMI (PDF)
- Home Buyer Assistance Program Statement for Over 80% AMI (PDF)
- Home Buyer Recapture Agreement (PDF)
- Home Buyer Assistance Loan Promissory Note (PDF)
- Request For Reservation Of Home Buyer Assistance Funds (PDF)
- Deed Of Trust and Deed Restrictions (PDF)
- Additional Program Information for Lenders (PDF)