New Orleans Soft Second Mortgage Program
UPDATE: AS OF 3/14/2019, THERE ARE $3 MILLION IN FUNDS AVAILABLE
Making the leap from renter to homeowner can be tough for some people in New Orleans. Workers in the hospitality and tourist industries typically don’t make a lot of money. And yet, they spend a large percentage of their income on rent.
The city of New Orleans and its new home mortgage program is now making it possible for low to moderate income home buyers to get assistance bridging the gap between their income and the cost of real estate anywhere within the city limits.
The term “soft second” comes from the fact that the government is subsidizing money for potential homeowners through forgivable loans to purchase property and become first-time homebuyers. This subsidized loan bridges the affordability gap between the price of the home including closing costs and the maximum amount a homebuyer can borrow with a first mortgage loan.
The Direct Homebuyer Assistance Program provides down payment and closing costs subsidies to eligible first- time homebuyers. The homebuyer receives only the amount of soft second funding that is needed to close the affordability gap.
There are income limits based on family size, but the limits and associated program grants are fairly generous. Participants will need to complete a home buyer training class before being eligible for the subsidies.
What home sellers need to know about the soft second program
- In addition to the normal home inspection, there will be a second inspection performed by the city
- Closing times for soft second financing are longer than for the average loan. Currently, it is ranging from 60-90 days from the time you accept a contract to the actual closing date
- Because the buyer is receiving assistance with closing costs, they generally negotiate based on price and condition only