No down payment? Middle class? No problem

Now even people with rather healthy incomes can qualify for no-interest loans for the down payment and closing costs.

By BRYAN GILMER

© St. Petersburg Times, published May 10, 2000

ST. PETERSBURG -- Nearly everyone who has used the city's zero-interest loan program to borrow the down payment and closing costs to buy a house is a low- to moderate-income earner.

But with a recent increase in the income caps, a software engineer, say, earning $45,000 a year with $20,000 sitting in a savings account can now qualify for the program, said Tom de Yampert, manager of housing finance and rehabilitation for the city government.

With such "Working to Improve Our Neighborhoods" loans, no payments are due on the down payment and closing costs for the first five years of home ownership. Then the homeowner begins slowly repaying that over several years. (Regular mortgage payments begin when the home is purchased.)

The hypothetical single, middle-class software engineer could leave her $20,000 savings in the bank to earn thousands in interest while she used the city's money for free to make the down payment on her new home in Crescent Lake or the Old Northeast -- without feeling guilty, de Yampert said.

"There's no reason for you not to," he said. "It is not a poor people program. It is not a racially concentrated program."

The WIN program does have the widely recognized goal of helping low-income households afford to buy their own homes. To that end, the loans are available citywide to households that earn 80 percent or less of median income. Median income is the level at which half of city households of the same size earn less and half earn more.

Federal money funds most of those loans.

But an equally important goal is to persuade higher-income people to move into several "target neighborhoods" close to downtown in the hope that they will invest money to fix up houses and revitalize the area.

Households can earn up to 150 percent of median income and still qualify for a target neighborhood loan. State and city money funds those loans.

It is especially easy to qualify since the city recently raised its income guidelines to reflect increases in the city's median income level, established by the U.S. Department of Housing and Urban Development.

Besides Crescent Lake and the North Shore, the target area includes Uptown, Historic Kenwood, Childs Park, Bartlett Park, Melrose/Mercy, 13th Street Heights, part of the Old Southeast and several others.

Home buyers must also qualify for a private mortgage and take a one-day class in home ownership. The home to be bought must meet city codes before the new owner moves in, de Yampert said.

So far, only two households above 120 percent of median income have used the program, something that baffles de Yampert.

"People look at our program as government charity. It's not," de Yampert said. "It's a loan," an incentive to help the city accomplish the public goal of neighborhood improvement.

EASIER TO QUALIFY

Here are the new maximum annual household incomes to qualify for a no-interest loan for a home down payment and closing costs:

One person -- $49,880
Two people -- $57,000
Three people -- $64,13
Four people -- $71,250
Five people -- $76,970

For more information, call (727) 893-7247.

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