Santa Rosa program to offer financial assistance to first-time homebuyers

A new Santa Rosa program could help residents get into their first home by providing low-interest loans to pay for hefty upfront costs associated with the purchase.

Santa Rosa’s Down Payment Assistance Loan Program will provide a maximum of 10% of the purchase price up to $75,000 to eligible first-time homebuyers seeking to purchase a home within city limits.

City officials say the program is geared to help increase homeownership opportunities for more residents across a wider socioeconomic demographic as many struggle in a housing market dominated by low supply, high prices and inflation.

The median sale price for a home in Santa Rosa was about $753,000 in August, according to Redfin.

The program is one of several being rolled out by local governments and nonprofits to help alleviate a housing crunch that has priced out many younger households, as well as Black and Latino residents.

Santa Rosa’s program is targeted toward moderate income homebuyers who often earn too much to qualify for traditional subsidized housing programs but are still priced out of homeownership, said Nicole Del Fiorentino, the city’s housing and community services manager.

“This is going to have an immeasurable impact on our ability to get people into a home,” Council member Chris Rogers said.

The City Council set aside $2 million from the city’s 2017 fire settlement with PG&E to fund the initiative and it’s expected to assist an initial 26 to 30 households, Del Fiorentino said.

The loan program is open to residents who earn up to 120% of the area median income, or about $122,950 for a two-person household, and meet other eligibility criteria.

Loan payments will be deferred until the home is sold or until the end of the 30-year term, helping keep more money in homeowners’ pockets each month. As loans are repaid the funds will become available again to other homebuyers.

Applications will be available Sept. 27 and prospective homebuyers can begin submitting their completed forms and financial information Oct. 2. Funding will be provided on a first-come, first-served basis until it runs out.

Officials anticipate funding will go quickly.

“It’s a limited amount of money and obviously we can’t help as many people as we’d like to but for the families that do get assistance it’s going to be life-changing to be able to buy a home in the community they want to live in,” Rogers said.

Prospective homebuyers could also tap into another assistance program being launched by nonprofit Burbank Housing that will provide up to $100,000 to eligible residents.

The city and Burbank will hold a virtual workshop 6-8 p.m. Sept. 27 to provide more information about the two programs and answer questions.

Down payments often a barrier

The down payment assistance program in Santa Rosa emerged from city discussions on how to spend a windfall of federal and other aid during the pandemic to alleviate poverty in the community, Rogers said.

The city’s Housing Authority has administered similar homeownership programs using state funds but it had been several years since funds had been available.

Ultimately, the City Council in February 2022 supported tapping PG&E settlement funds for the program, which was championed by then-Council member Jack Tibbetts.

Homeownership has long been seen as one of the easiest ways to build equity but the Bay Area’s high cost of living coupled with the economic impacts from years of disasters and the pandemic, plus a chronic supply shortage, has made it difficult for many prospective buyers to afford a home.

Down payments can be an imposing barrier for many residents who are struggling to save while keeping up with rising rents and soaring costs of every day goods.

About 26% of first-time homebuyers nationally said saving for a down payment was the toughest part of the homebuying process, according to a 2022 survey from the National Association of Realtors.

Many cited their limited income, rising rents and debt as reasons they were unable to save.

Under Santa Rosa’s program, prospective homebuyers must contribute a minimum of 1% of the purchase price toward the down payment, lower than what a typical mortgage may require.

The loans would be considered like a secondary mortgage and will be secured through a deed of trust record against the property.

Participants must repay the principal amount of the loan, 3% annual interest accrued over the life of the loan and fees when the property is sold, transferred, in some cases refinanced or at the end of the 30-year term limit.

Homebuyers approved for a $50,000 loan who sell their home in 15 years would expect to pay the city about $72,500, including accrued interest, plus applicable fees.

As loans are repaid and when enough funding has been generated the city will reopen applications for another round of loans, Del Fiorentino said.

Rogers said while the city would have liked to help more families initially, having a revolving loan fund will allow more people to tap into the funds long-term.

Burbank Housing loans

Santa Rosa-based Burbank Housing, a leading local affordable housing developer, also is gearing up to launch a down payment assistance program on Sept. 27 after receiving $14.72 million through the state’s CalHome program.

Burbank will provide loans for up to 40% down and of up to $100,000 to eligible first-time homebuyers.

Loans are available to low-income residents who earn 80% of the area median income or less, or $80,550 for a two-person household, or up to 120% of the area income for victims impacted by wildfires.

The program is open to all Sonoma County residents, so Santa Rosa residents could access up to $175,000 if they qualify for Burbank and the city programs.

A separate application for the Burbank program, which has other eligibility and approval requirements, is required. More information can be found online on Burbank’s website.

The application portal will open Sept. 27 and the nonprofit has already received 100 pre-applications from interested residents in the last two months, according to the organization.

Assistance key for local workforce

Rogers said young professionals struggling to stay in Santa Rosa long-term and the workforce that businesses have had trouble attracting to the region because of the high cost of living could benefit from the funds.

Kirstyne Lange, president of the local chapter of the NAACP, said the programs could be critical for marginalized communities, particularly Black residents in the county who make up a small share of homeowners and are also overrepresented among the local unsheltered population.

Less than 1% of homeowners in Sonoma County are Black and about 14% are Latino, according to estimates from the 2022 American Community Survey. White households make up about 76% of the estimated 119,655 owner-occupied households in the county and two-thirds of homeowners are 55 or older, the data shows.

Lange said her group has been working in collaboration with other nonprofits and agencies across the nine-county Bay Area to address historical housing inequities for Black residents. Among the programs they’ve advocated for are grants to help prospective homebuyers cover down payments and other closing costs.

But while the programs can address one barrier to homeownership, proponents cautioned that equal effort must be made to create more housing.

Even with financial assistance options are limited for many first-time homebuyers, said Calum Weeks, policy director with housing advocacy group Generation Housing.

Under Santa Rosa’s program, the maximum home price of an eligible home can’t exceed the median sale price of existing single-family homes for the area listed by the California Association of Realtors.That figure was $850,960 in July.

Weeks said the available homes that fall into the price range of many first-time homebuyers are older units that need work, are income- or age-restricted or are further away from the city-center and employment sectors.

A search of properties listed for sale and under contract on Redfin across the city within the maximum price range showed manufactured homes were often the most affordable options. Many of the homes were older and there were few condos and townhomes, which could appeal to younger homebuyers. About a quarter of the 315 available properties were vacant parcels.

Weeks said the city and region should prioritize the construction of lower-priced starter homes, condos and townhomes to help expand first-time homebuyers’ options.

You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com. On Twitter @paulinapineda22.