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Inclusionary Housing Program

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Affordable Ownership Housing

The City of Huntington Beach Inclusionary Housing Program

The City provides for affordable low, median, or moderate income families through a City-wide Inclusionary Housing Program. Homes become available for purchase by eligible buyers when new developments are built or when existing homeowners decide to sell.

The Inclusionary homes have an affordability period up to 60 years from the time a home was built, any Inclusionary Housing Program home that is sold must be purchased by an eligible buyer and the price of the home must fall within an affordable price limit calculated by the City. Prices are calculated for affordability; this calculation is not driven by property values or other market conditions.

The City records a lien on each affordable home that remains on title for the duration of the affordability period. The lien ensures that the City is able to enforce the Inclusionary Housing Program requirements, including the resale restrictions.

Service Fees for Inclusionary Housing Program

As of January 6, 2017, the Office of Business Development charges fees for the following housing program services:





Service Fee Loan Payoff Demand $140 Subordination Agreement $250 Reconveyance $80 Sales Price Determination One free per year

$50 for each additional request

Payment will be required at the time of application. Checks should be made payable to the City of Huntington Beach.



Buying an Affordable Home

From time to time, affordable homes are available for purchase (Get List). To be eligible to buy one of these homes, your total household income must be within certain limits. Most homes are restricted to moderate-income buyers; a limited number are restricted to low or median-income buyers. The City examines total gross income (before taxes or deductions) from all sources for all household members, even if not all household members are related or intend to be named on the mortgage or title. Home buyer eligibility is based only on gross household income; net worth is not considered.

If you find an affordable home that you are interested in buying, you or your Realtor should contact the listing Realtor and negotiate a purchase offer. After your offer is accepted, you will be given several forms to complete, and you will be asked to provide copies of recent pay stubs and tax forms; occasionally, additional documentation may be required. This information is necessary to verify your income eligibility. The Office of Business Development will examine these documents for the sole purpose of determining eligibility.

Maximum Selling Price

At the time of initial sale and for all re-sales during the affordability period, the maximum price for each Inclusionary Housing Program home is calculated by the City. The City’s formula is intended to provide the amount an eligible buyer should be able to pay without spending more than 35% of their gross income towards housing expenses. Prices are calculated for affordability; this calculation is not driven by property values or other market conditions. When the City calculates a maximum sales price, the price equals the present value of the anticipated amount of the buyer’s income available for mortgage payments over 30 years at the current interest rate, plus a 10% assumed down payment. A sample calculation using this formula is provided along with an explanation of the variables used in the formula. When determining housing expenses, Homeowners’ Association Dues relate to a specific housing development; utilities are determined by bedroom count (see below); property insurance is assumed by periodically survey of local insurance companies to determine the typical annual cost of insuring a home for its replacement value; maintenance is a nominal cost that homeowners will be expected to incur for maintaining their property over a one-year period; and the property tax rate applied determines the annual property tax costs will be 1.08% of the purchase price of an affordable home. Utilities Month Year 1-bdrm 104 1248 2-bdrm 132 1584 3-bdrm 170 2040 4-bdrm 207 2484 (Source: Orange County Housing Authority, effective 11/1/2017)

Pricing Example Moderate Income Limit for a Family of 4

(3 Bedroom Home) $101,970 35% of Income $35,690 Less Housing Expenses: HOA Dues -3,600 Utilities Expenses -2,040 Property Insurance -900 Maintenance -600 Property Taxes -4,944 Annual Income Available for Mortgage Payments $35,690 Interest Rate 4.00% Present Value of Income Available for Mortgage Payments over 30-Year Term $412,030 Plus 10% Down Payment 45,781 Maximum Sales Price $457,811

*The pricing example provided is intended for explanatory purposes only and is not necessarily reflective of current pricing calculations.

View more sample sales price calculations

The buyer’s anticipated income available for mortgage payments equals the income limit (either low, median, or moderate, depending on the home being priced) for a household size equal to the number of bedrooms in the home plus one (a three bedroom home would use the income limit of a family of four). 35% of this amount is then decreased for anticipated home ownership costs, including homeowner association dues, utility expenses, property insurance, maintenance expenses, and property taxes. The income remaining is the amount a homeowner would be expected to be able to pay on

their mortgage.

The interest rate used will be the lowest Fannie Mae 30-year, fixed yld-90day mortgage rate, as published in the finanicals.com for the three months immediately proceeding the proposed home purchase.

Owning and Selling an "Affordable" Home The Office of Business Development monitors the various affordable housing communities to ensure compliance with program requirements. These requirements include the following: Homes must be owner-occupied.

Homes may not be rented.

Home mortgage refinances and second liens must be approved by the City.

Home re-sales must be approved by the City. Affordable homes are covenanted by the City for up to 60 years. These covenants enable the City to enforce the various program requirements. If you are interested in selling your home, you will need to obtain an Inclusionary Housing Program packet from the Office of Business Development. Complete and return the Request for Sales Price Determination. Your maximum sales price will be calculated, and your property will be added to the list of homes for sale. This packet will include material for the buyer you select. It is your responsibility to find an eligible buyer and to direct the buyer to the City for approval. When the buyer's eligibility is confirmed and your negotiated sales price is found to be within the affordable limit, your sale will be approved. Many people ask if affordable homes can build equity. As with any home, building equity depends on various factors, such as the status of the real estate market. Unlike unrestricted homes, equity growth in affordable homes is not solely market driven and may be limited due to program restrictions. Developments There are several housing developments in Huntington Beach that have affordable housing covenants: Name Built Units Income Eligible Location PHOTO Ash Street condos 2002 6 Units Median Ash St. Brisas

Del Mar 1993 44 Units Low &

Moderate Delaware St.

& Utica Ave. Cape Ann 1999 146 Units Moderate Breezy Lane &

Sea Gate Drive Greystone

Keys 1998 23 Affordable

150 Total Moderate Promenade

Parkway &

Sea Gate Pacific Park

Villas 1996 25 Units Moderate Joyful Lane &

Happy Drive Pacific Shores 2011 21 Affordable 123 Total Low & Median Newland & Atlanta The Promenade 1999 80 Units Moderate Main Street &

Promenade Parkway The Tides 2004 12 Affordable

77 Total Moderate Goldenwest &

Summit Drive Tuscany 2007 5 Affordable

28 Total Moderate Gothard & Garfield Villas at Seacliff 2008 4 Affordable

19 Total Moderate Gothard & Garfield



Forms and Brochures Want more information about the Inclusionary Housing Program?

Get list of Inclusionary Homes for Sale

Get the Inclusionary Housing Program Brochure

Frequently Asked Questions

Inclusionary Housing Income Limits

Interest rate used to calculate Sale Price: 4.18% (10/1//2018) Published lowest interest rate of preceding 3 months. July 2, 2018 - 4.08% August 1, 2018 - 4.17% September 4, 2018 - 4.18% Please Note: Interest rates used to calculate maximum sale prices may have a significant effect on the maximum sale price outcome. When interest rates are lower, the maximum sales price will increase in price. When interest rates are higher, the maximum sales price lowers in price.



(10/1//2018) Please Note: Interest rates used to calculate maximum sale prices may have a significant effect on the maximum sale price outcome. When interest rates are lower, the maximum sales price will increase in price. When interest rates are higher, the maximum sales price lowers in price.

Interested in buying an Inclusionary Housing Program home?

Form for current homeowners

Regulations

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