If you're going to buy a short sale, foreclosure or abandoned home in parts of Baltimore, you could be eligible for a $25,000 incentive.
A consortium led by Healthy Neighborhoods Inc. has $26 million in federal money to try to keep the foreclosure crisis from destabilizing neighborhoods, and it's planning to give some of it to buyers intending to reoccupy these homes.
The $25,000 starts out as a loan, with half of it converting to a grant over 10 years. The rest is paid back when you sell -- assuming the home's value increased.
If it didn't, "we will write off the mortgage so it doesn't get in the way of resale," said Mark Sissman, president of Healthy Neighborhoods.
Certain parts of certain neighborhoods are eligible: Belair-Edison, Better Waverly, Coldstream Homestead Montebello, Ednor Gardens-Lakeside, Reservoir Hill, Patterson Park/McElderry Park and Barclay/Old Goucher. Where, exactly, comes down to census tracts -- see here for more details.
The incentive is larger in Reservoir Hill -- "could be as much as six figures," Sissman said. "There will be loan-to-value issues there. It will simply cost more to buy and renovate than most banks will lend. It's the difference between a 1,200-square-foot house in Patterson Park and a 3,000-square-foot house in Reservoir Hill."
Like the home buyer tax credit, this incentive has income limits:
One-person household: $69,000
Three-person household: $88,680
Four-person household: $98,520
Five-person household: $106,440
(Got a bigger family? See more income-limit numbers here.)
The money is part of the second round of the Neighborhood Stabilization Program, an effort to get foreclosures occupied again. Healthy Neighborhoods is setting aside just over $1 million for these buyer loan/grants, enough for about 40 purchases.
The rest of the money is earmarked for groups that will buy foreclosures, rehab them and sell them, but Sissman said Healthy Neighborhoods will move more money into the $25,000-incentive pot if it proves popular.
"The competition for these buildings is typically with investors," he said. "This creates a way for homeowners ... to compete with money in hand."
Healthy Neighborhoods selected the geography of eligibility by looking for census tracts with foreclosure troubles in neighborhoods it works in. The second round of the Neighborhood Stabilization Program funding was competitive, so the nonprofit needed to show that the money was -- well -- needed.
The condition of these homes varies quite a bit. Sissman expects that some are in good shape and don't need work. Some, particularly in Patterson Park, were bought by investors who got partially into a rehab before giving up. And some need a complete makeover.
Healthy Neighborhoods will be holding meetings in June to explain the program.
"It's a great opportunity to continue stabilizing the housing market, and giving people a chance to buy," Sissman said.
Does this program interest you, buyers? The first iteration of the first-time home buyer tax credit was essentially a loan, and the market reaction was "meh." But that was $7,500, and all of it had to be paid back over 15 years.