With Pasadena real estate prices declining over the last several months, many would be home buyers still find themselves priced out of the market. The reasons may include insufficient funds for a down payment, or overall prices coupled with the mortgage payment and taxes still exceeding their monthly budget. If this describes your current situation, the City of Pasadena may be able to help.

Housing programs available through the City include rental and home ownership. For the purposes of this article we will look at programs available to those wishing to become homeowners. For those people who do meet the requirements, a few caveats also come along. These may or may not change depending upon the program you are applying for:

1. Eligibility – restrictions are imposed on who can and cannot qualify.
2. Owner Occupied – if you are going to be a recipient of the program, you must also live in the unit. Forget the “would be” landlords aspiring to let the property and collect a rental check.
3. Income Limits – due to the generosity and intent of the program, income limits have been placed on the applicants wishing to apply for the aid. These income limits are determined for low to medium income households as determined by a formula using the median income for LA County as determined by the U.S. Department of Housing and Development. Income limits vary by the number of people in a household.
4. Restrictions on Selling – the City may receive a “first right of refusal” to purchase the property or may share in the increased equity, once you decide its time to move on.
5. Increasing Income – rising income may impair your ability for ongoing participation in the program

As with anything, a critical implied component is timing. Timing is important since federal, state and local money is the source of funds. These programs will usually have a predetermined annual budget. In other words, you need to know when the money becomes available and take the necessary steps towards application. Once the money is gone, you will more than likely be waiting until next year.

Down Payment Assistance

Known as the Homeownership Opportunity Program, this option is available as long as the purchase price does not exceed $425,000 and offers down payment assistance in the form of a second trust deed up to $200,000 with a 45 year term. To sweeten the deal, interest and principal for the first 5 years are waived. Plus, the interest on the second trust deed may be as low as 1.5%. A purchaser has to make a minimum of a 3% down payment which can also be a gift and must be a first-time homebuyer. The critical factor is your ability to meet the qualification terms of the first loan. Also participants have to attend a special homebuyer education class.

Pasadena Inclusionary Housing

As you drive through town slowing down at the construction zones, you probably did not realize that some of those units being constructed are reserved for Low to Moderate Income Households as Affordable Housing. Before the City of Pasadena agrees to green light new development, the Developer has agreed to set aside 15% of the available units for this special program. Priority is given to eligible households that live and work in the City of Pasadena. I should also preface this paragraph by saying that other options are available to Developers if they choose not to set aside the required ratio of mandated units. They may offer a payment In-Lieu fee, may build other affordable housing off site, or may convey other land to the City. Each development project is different and may hinge on whether the developer was granted a density bonus as to the choice of action they pursue. Unlike the HOP (above), being a first time buyer is not a prerequisite for the program.

To find out what other programs are available as well as which projects may be participating, I would suggest checking with the City of Pasadena or working with a local Pasadena Real Estate Agent who can help you navigate the process.