PORTLAND, Ore. — It's no secret Portland's housing prices have skyrocketed over the past few years, but a new pilot loan program is making it easier for low to middle-income residents to buy their first homes.
Portland teacher Abby Peterson took advantage of Consolidated Community Credit Union's program, after years of being unable to save up enough for a down payment.
“I could get someone to give me the money, but coming up with a down payment was so hard. And then I just felt like I couldn’t get ahead either. I was saving for a down payment or I was paying down student loan debt," Peterson said.
The pilot program allows borrowers to buy a home without making a down payment of their own.
"We tried to take all of the road blocks that typically exist for homeowners to buy a home. We tried to take some of that friction out of the process,” CEO and President of Consolidated Community Credit Union Larry Ellifritz said.
The median home value in Portland is $419,700, according to Zillow, which can make the prospect of buying a home feel bleak.
“I feel like it would have taken me a decade plus to be able to save up the money that I would need for a down payment,” Peterson said.
She is not alone.
The Portland Housing Center (PHC) offers home buyer education and resources to make home ownership a reality for Portland-area residents.
According to the center, some of the biggest challenges to home ownership in the city include:
- Inability to make a down payment: 75 percent of clients do not have enough money saved.
- Credit score: 18 percent have credit score issues and/or high debt to income ratios
- Lack of education on buying a home
“Doing it myself was definitely overwhelming and daunting,” Peterson said.
Consolidated Community Credit Union offers the 100 percent loan-to-value financing for low income buyers. It was made possible through a $700,000 dollar grant from the U.S. Treasury, which also takes away the requirement for mortgage insurance.
“What's great about it is you can buy a home without money down and if you structure it properly, you can have the seller pay the closing costs. So, you literally can buy a home without having any of your dollars into it,” Ellifritz said.
The pilot loan also lets borrowers avoid the high-priced mortgage insurance of an FHA loan.
There are some restrictions.
If a buyer has an income of less than $70,300 and they buy a home in Multnomah, Clackamas, or Washington County they quality for the program. If the buyer makes more than that, they can still qualify for the program, they just need to purchase a home in the reinvestment area.
The ability for the program to continue without grant money is yet to be seen, but for now, it is giving people like Peterson a way to invest in their future and community.
“Taking things out of pots and putting them into the ground is literally like planting roots,” Peterson said. “And it just feels, really cheesy, but great.”
Help from credit unions and organizations such as the PHC is becoming a necessity, preparing those looking to buy a home for the challenges ahead.
PHC offers fixed interest rates, low payments, and assistance with down payments and closing costs.
Of the 351 home buyers the PHC served in the last fiscal year, their median income was $61,500 and median home price for those clients was $315,000. Thirty-seven percent of clients had to rely on one or more form(s) of loan assistance to make a down payment.