Housing

The City Council and Banning Housing Authority Board (“Council”) approved funding for housing programs on June 12th, 2018. The purpose of the programming is to encourage homeownership and to preserve the existing housing supply. In order to remain in compliance with use of funding, the Council approved programs that primarily benefit low income families (as defined by the California Department of Housing and Community Development, limits defined here). The chart below illustrates income levels residents could potentially qualify for “Low” income funding. For example, a family of six with an annual income that does not exceed $62,550, would potentially qualify.

Riverside County 4-Person Area Median Income: $65,800
Riverside County Housing State Income Limits (California Department of Housing and Community Development)
Income Category
Number of Persons in Household
1
2
3
4
5
6
7
8
Extremely Low
$14,150
$16,460
$20,780
$25,100
$29,420
$33,740
$38,060
$42,380
Very Low Income
$23,600
$27,000
$30,350
$33,700
$36,400
$39,100
$41,800
$44,500
Low Income
$37,750
$43,150
$48,550
$53,900
$58,250
$62,550
$66,850
$71,150
Median Income
$46,050
$52,650
$59,200
$65,800
$71,050
$76,350
$81,600
$86,850
Moderate Income
$55,250
$63,150
$71,050
$78,950
$85,250
$91,600
$97,900
$104,200

The Council approved funding for and directed staff to prepare program guidelines for the following programs:

• Down Payment Assistance Program (DAP) – provides 1% up to $20,000 of purchase price toward down payment.

o Applicants are strongly encouraged to seek pre-approval early in your home shopping experience, to ensure your complete application has been reviewed and can be approved before your estimated close of escrow.

o Carries a mandatory affordability covenant (deed restriction, effectiveness expires after 30 years). 

o Security is a promissory note and silent second (junior deed of trust), repayment required upon sale or refinance with cash out. Refinancing for lower term, covenant cannot be extended past original 30 year loan.

o Program Guidelines can be found here and the Application can be found here.*

o Applicants are required to take an approved first-time homebuyer class. You may contact Credit.org for their HUD-approved class schedule at (800) 449-9818.

• Energy Efficiency Rehabilitation Program (small) – provides $2,000 grant or $5,000 forgivable loan toward energy efficiency and rehab costs (repairs most detrimental to health and safety addressed first).

o Generally repairs/upgrades under this program include: caulking, piping insulation, HVAC duct repair, weather-stripping, waterproofing, low flow toilets, energy efficient items (i.e. CFLs, LEDs, interior light timers/automatic shutoffs).

o Grant option – one time, per homeowner, per residence limit.

o Forgivable loan option – Loan may be forgiven after five years of occupancy. If home is sold before term, loan is due, payable to the Agency.

o Program Guidelines can be found here and the Application can be found here.*

• Energy Efficiency and Minor Home Repair (big) – Forgivable loan of up to $10,000. Similar terms to loan option above.

o Repairs/upgrades include items above in addition: grading to correct flooding, repair/replacement of screens, windows, doors, roofing, siding, structural/foundation damage, and ADA modifications to aid mobility of elderly and physically disabled.

o Program Guidelines can be found here and the Application can be found here.*

*Average processing times are dependent upon submission of a complete application, extent of repairs requested (rehabilitation programs), staff availability, and periodic Council approval of funding

Additional Considerations

• Fee Waiver of City-related fees for construction of a single family residence – up to $20,000. Affordability covenant required for 45 years.

• Events - targeting residents with topics that include: increasing financial awareness, importance of consumer credit, mortgage process, predatory lending, etc.

• Underwriting multi-family complexes – these agreements would require a 55 year affordability covenant and Council approval, similar to an economic development incentive for a business attraction/expansion project.

If you are interested in applying for the down payment assistance or rehabilitation program(s) outlined above, please completely review the program guidelines and submit a complete application. Incomplete applications will not be considered for funding. Programs are subject to funding availability.

Mortgage Credit Certificate Program
The Mortgage Credit Certificate (MCC) entitles qualified home buyers to reduce the amount of their federal income tax liability for an amount equal to 20% of the mortgage interest paid during the year on their primary mortgage loan. The advantages to the home buyer include:

The home buyer’s federal income tax liability is directly reduced by the amount of the tax credit;

Home buyers can qualify more easily for their primary mortgage loan-lenders may factor in the tax credit when underwriting the loan application, which may allow the borrower to (i) qualify for a larger loan amount, or (ii) improve the borrower’s qualifying debt ratios.

If the amount of the MCC exceeds the homebuyer’s tax liability, the unused portion of the credit can be carried forward to the next three years or until used, whichever comes first.

Homebuyer Eligibility Criteria

There are three basic criteria for determining a home buyer’s eligibility for the MCC tax credits:

1. The borrower must be a first time Home Buyer defined as a person who has not had an ownership interest in improved-upon residential real property for the previous three (3) years.*

2. The borrower’s annual income must fall within the program income limits as follows:

Max Income Outside Target Area1
        Household w/ 1-2 persons: $73,300
        • Household w/ 3+ persons: $84,295

Max Income Inside Target Area1
        • Household w/ 1-2 persons: $87,960
        Household w/ 3+ persons: $102,620

1 Banning Target Areas can be found on a map here (Target Areas are census tracts designated by the Federal government to encourage investment).

3. The home being purchased must fall within the program purchase price limits as follows:

Max Home Purchase Price
        • Outside Target Area: $349,411
        • Inside Target Area: $427,058

*If the home is located in a Target Area census tract, then the first-time buyer requirement does not apply and the income and purchase price limits are higher. 

The residence purchased in conjunction with an MCC must be the borrower’s principal residence and may not be used as a business, rental or vacation home. The home may be a new or re-sale, detached or attached single-family home, condominium unit, a co-op unit, or a manufactured home on a permanent foundation.

Mortgage Credit Certificate Application Process

The jurisdiction in which the home is located must be a participant in the County MCC program administered by the Riverside County Economic Development Agency (EDA). The application process is as follows:

1. Borrowers must apply for a MCC through a Participating Lender.

2. The Participating Lender will perform an initial qualification and assist the borrower in completing the MCC submission forms.

3. Buyer makes offer on home and goes into escrow.

4. The Lender then submits the MCC application to the County.

5. The County reviews Borrower and property qualifications and, if they meet the program guidelines, issues a letter of commitment to the Lender.

6. The Commitment Letter must be issued prior to the close of the loan.

7. The loan must close within 60 days of the commitment.

8. Upon loan closing, the Lender submits the MCC Closing Package to the County and the County issues the MCC, with the Lender and borrower each receiving a copy.

9.  The borrower may then claim the tax credit on their Federal Income Tax
Returns.

10. Borrowers can realize the tax credit annually as a tax refund or adjust their W-4 withholding allowances form to receive the benefit via an increased pay check.

The following table illustrates how an MCC may increase a borrower’s "effective
home buying power":

* Annual Income Needed is based on monthly Principal and Interest (P&I) not exceeding 28% of monthly income.
     Without MCC With MCC
First Mortgage Amount $300,000 $300,000
Mortgage Interest Rate 4% 4%
Monthly Mortgage (Principal & Interest) $1,432 $1,432
MCC Rate N/A 20%
Monthly Credit Amt. N/A $200
“Effective” Monthly Mortgage Pymnt. $1,432 $1,232
Annual Income Needed* $61,371 $52,800

If you have questions regarding the housing programs, you may call the Community Development Department at (951) 922-3125.

Additional Housing Resources

County of Riverside Housing Authority at (951) 351-0700 or check their website at http://www.harivco.org/. Their office location is 5555 Arlington Ave, Riverside, CA 92504.

• Riverside County Economic Development Agency at (951) 343-5469 or check their website at http://www.rivcoeda.org/Departments/Housing/tabid/57/Default.aspx. Their office location is 5555 Arlington Avenue, Riverside, CA 92504

California Housing Finance at 877.9.CalHFA or 916.326.8677 or check their website at http://www.calhfa.ca.gov/.

Federal Housing and Urban Development at 714-796-5577 or check their website at http://portal.hud.gov/hudportal/HUD?src=/buying/loans. Their field office location is Santa Ana, Federal Building, 34 Civic Center Plaza, Room 7015, Santa Ana, CA 92701-4003.

• State of California Department of Community Development at 916-445-4775 or check their website at http://www.hcd.ca.gov. Their office is located at 1800 Third Street, Sacramento, CA 95811.