Housing Trust Silicon Valley (“HTSV”)
Gap Assistance Program (GAP) Program
Program Description: The Housing Trust Silicon Valley’s Gap Assistance Program may be used
for down payment on properties located within Santa Clara County.
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The maximum loan amount is 20% of the purchase price up to $57,500.
The interest rate on the loan is 3% simple interest per annum.
Payment of principal and interest is deferred until expiration of the term, or sale, transfer
(except under specific circumstances, see below) or refinancing of the property.
The loan term is 30 years.
Minimum borrower contribution of 3% for this financing. At least 50% of the required
borrower contribution must come from the borrower’s own funds.
Combined loan-to-value for this program cannot exceed 100%.
The first mortgage lender must impound taxes and insurance.
Maximum Property Purchase Price: $579,000
The GAP is funded by the California Department of Housing and Community Development under
the CalHome Program.
Eligibility Requirements:
1. The borrower(s) must be a first-time homebuyer. First-time homebuyer is defined as not
having owned a home in the past three years.
2. The gross annual household income of the borrower(s) does not exceed 80% of the Area
Median Income in Santa Clara County (see the chart below). Gross annual household
income includes income of all persons 18 and older who will be living in the house.
1
$59,400
2
$67,900
Table of 80% AMI by Household Size
3
4
5
6
$76,400
$84,900
$91,650
$98,450
7
$105,250
8
$112,050
3. The borrower(s) must attend an eight-hour HUD approved Homebuyer Education class and
receive a certificate from Project Sentinel, Neighborhood Housing Services Silicon Valley
or Asian, Inc.
4. The borrower’s total “Front-End” Housing Cost to Income Ratio cannot exceed 38%.
Housing Cost includes all principal and interest payments, property taxes, monthly HOA
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fees, property hazard insurance, and Private Mortgage Insurance (PMI) premiums, if any.
Total monthly Housing Cost must not be greater than 38% of the borrower’s total gross
monthly household income.
5. The borrower’s “Back-End” debt to income ratio cannot exceed 45%. This means that when
all of a homebuyer’s debts are added up, including the Front‐End Debts (including first and
second mortgage principal and interest payments, property taxes, property hazard insurance,
monthly HOA fees, and Private Mortgage Insurance (PMI) premiums, if any), plus any car
payments, credit card payments and any and all other debts, loans, charge accounts, and
business expenses, if applicable, etc., those total monthly payments added together must not
be greater than 45% of the homebuyer’s total gross monthly household income.
6. The borrower(s) must have a FICO credit score of 620.
7. The property must be located in Santa Clara County and will be the primary residence of the
borrower(s).
8. The first mortgage loan must be a 30-year, fixed-rate amortizing mortgage.
9. The first mortgage lender must impound taxes and insurance.
10. The borrower(s) must make a minimum contribution of 3% of the purchase price.
11. The borrower’s post-closing liquid assets cannot exceed $60,000.
12. The borrower(s) have a signed purchase agreement (for the loan property).
13. The close of escrow date is no more than 120 days and no less than 21 days from date of
application.
14. GAP cannot be used on Dream Homes funded by the Neighborhood Stabilization Program.
15. GAP cannot be layered with BEGIN loans.
16. No financing subordinate to the GAP loan may have a balloon, deferred or negative
amortization payment prior to 30 years. Fees and/or charges for subordinate financing shall
be consistent with industry standards. Any additional subordinate financing will require
HTSV approval.
17. Maximum sales price will not exceed 60% of the Median Sales Price for Santa Clara County
to be adjusted yearly, as determined by the California Association of Realtors in its County
Market Update for the month of July.
Loan Repayment Terms: The GAP loan is a 3% simple interest deferred loan payable in full on
the maturity date of the First Loan, or upon any sale, transfer (except under specific circumstances,
see below) or refinance of the first loan, whichever occurs first. There is no prepayment penalty.
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Application Process: Borrower(s) who meet the eligibility requirements listed above can apply for
a GAP Loan, as follows:
1. Meet with a Certified Loan Officer/Mortgage Loan Originator (LO/MLO) to review the
different loan programs and their requirements. The LO/MLO completes a preapproval for
first loan. The LO/MLO completes the Loan Information for Eligibility Determination pages
of the Eligibility Application
2. To determine eligibility, the borrower completes and signs the Eligibility Application and
submits with all required documentation to Housing Trust by appointment.
3. The borrower(s) must submit the most recent three years of signed Federal Income Tax
returns with W-2s, the four most recent and consecutive paystubs for all household members
over the age of 18, three most recent and consecutive statements for all asset accounts and
an explanation of the source of funds being used for the borrowers contribution.
4. The borrower(s) must submit written Verification of Employment forms for all household
members 18 and over who are earning income.
5. The borrower(s) must submit a copy of the credit report. For married couples, each spouse is
required to submit a credit report regardless of who is on the first loan.
6. Upon determination of program eligibility, borrower may enter into a purchase agreement.
7. The LO/MLO will review the GAP loan program requirements and the loan application
process with borrowers. The LO/MLO will assist the borrower in completing the HTSV loan
application and select the GAP program.
8. Complete a Uniform Residential Loan Application (Fannie Mae Form 1003, available
through your LO/MLO), and have the LO/MLO sign it. Submit Uniform Underwriting and
Transmittal Summary (Fannie Mae 1008).
9. Submit a copy of the Automated Underwriting System (AUS) approval.
10. Submit a copy of the Preliminary Title Report for the loan property, and wiring instructions
regarding the wire transfer of funds (from the Title Company).
11. Submit a copy of the signed Purchase Agreement for the loan property.
12. Submit a copy of the appraisal on the property.
13. Submit a copy of Deed Restrictions on the property, if any.
14. The LO/MLO packages the documents referenced in 7 - 13 above and submits to HTSV via
mail or courier. NOTE: The Loan Application Package must be submitted to HTSV by
the lender.
15. The loan application package must be received at HTSV no more than 120 days and no less
than 21 days from close of escrow date.
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Calculating Gross Income: Gross Income means all anticipated eligible income of a person or
household for the 12-month period following the date of determination of income. Income will be
determined using California Code of Regulations Title 25 Section 6914. Refer to Appendix A,
Gross Income Inclusions and Appendix B, Gross Income Exclusions.
Application Review Process: The Loan Application Package is reviewed within 3 business days of
receipt by HTSV staff. At the time of the Initial Review of the application package, the lender is
notified by email that either a) the borrower(s) application package is complete, the borrower(s)
meet all eligibility requirements, and a loan will be awarded (the dates for which the loan funding
and the transfer of monies are scheduled is also provided); or b) the borrower(s) loan application is
incomplete and application processing will recommence upon receipt of the missing
documents/information; or c) the borrower(s) are ineligible and the application package is being
returned. If loan application package is considered complete, HTSV will issue required loan
disclosures to the borrower.
Loan Underwriting: Once the application has been determined to be complete, the underwriting
process will commence. The Housing Trust will approve or deny the application within 3-4
business days of the date of application completion.
When an application is complete, the borrower and property have been determined to be eligible,
and the borrower(s) have completed the one-on-one counseling session with HTSV staff, the
Housing Trust will issue a Loan Commitment Letter.
The Housing Trust may require additional borrower’s contribution if the applicant has a bankruptcy,
foreclosure or short sale in the credit history. The Housing Trust reserves the right to deny an
application because of bankruptcy, foreclosure, or short sale.
If the loan application is denied and applicant disagrees with the decision of the Housing Trust, they
have the right to appeal by requesting an appeal form from Homeownership Program staff.
Loan Documents: A loan document request will be sent to the LO/MLO. The LO/MLO must fill in
and return the loan document request to HTSV. The Housing Trust requires at least 48 hours
notice. Upon confirmation from the title company that the first lender’s loan documents are in title,
the Housing Trust will send our loan documents out.
Funding of Loans: The Housing Trust will not fund a GAP loan without receiving a HUD-1
Estimated Buyer’s and Seller’s Statement or Closing Disclosure (for the buyer and seller) from the
Title Company prior to funding. The Housing Trust reserves the right to reduce the amount of the
GAP Loan based on the Estimated Settlement Statement.
The borrower(s) are not permitted to receive more than $500 cash back at closing. Any funds
received by the borrower(s) must be due to excess deposit as a result of over-estimation of title and
escrow charges. Borrower(s) must meet Housing Trust minimum borrower contribution
requirement. Failure to meet this requirement may result in the loan officer being disqualified from
submitting any future application for Housing Trust programs.
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The Housing Trust GAP Loan will be subordinate to the First Mortgage. The GAP Loan must be
in SECOND lien priority.
Allowable Transfers Under Specific Circumstances:
1. The transfer of the Property to the surviving joint tenant by devise, descent or operation of the law,
on the death of a joint tenant.
2. A transfer of the Property where the spouse becomes an owner of the property;
3. A transfer of the Property resulting from a decree of dissolution of marriage, legal separation or from
an incidental property settlement agreement by which the spouse becomes an owner of the Property.
4. A transfer to an inter vivos trust in which the Borrower is and remains the beneficiary and occupant
of the property.
Default Notice: Reduced principal payoffs will not be approved. Short sale requests for anything
amount less than the outstanding principal balance of the GAP loan will not be approved.
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APPENDIX A
Appendix A
Title 25 Section 6914 Gross Income Inclusions
“Gross income” shall mean the anticipated income of a person or family for the
twelve-month period following the date of determination of income.
“Income” shall consist of the following:
(a) Except as provided in subdivision (b), “Exclusions”, all payments from all
sources received by the family head (even if temporarily absent) and each additional
member of the family household who is not a minor shall be included in the annual
income a a family. Income shall include, but not be limited to:
(1)
The gross amount, before any payroll deductions, of wages and salaries, overtime
pay, commissions, fees, tips and bonuses;
(2)
The net income from operation of a business or profession or from rental or real or
personal property (for this purpose, expenditures for business expansion or
amortization of capital indebtedness shall not be deducted to determine the net
income from a business);
(3)
Interest and dividends;
(4)
The full amount of periodic payments received from social security, annuities,
insurance policies, retirement funds, pensions, disability or death benefits and other
similar types of periodic receipts;
(5)
Payments in lieu of earnings, such as unemployment and disability compensation,
worker's compensation and severance pay
(6)
Public Assistance. If the public assistance payment includes an amount specifically
designated for shelter and utilities which is subject to adjustment by the public
assistance agency in accordance with the actual cost of shelter and utilities, the
amount of public assistance income to be included as income shall consist of:
(7)
(A)
The amount of the allowance or grant exclusive of the amount
specifically designated for shelter and utilities, plus
(B)
The maximum amount which the public assistance agency could in fact
allow for the family for shelter and utilities,
Periodic and determinable allowances such as alimony and child support payments,
and regular contributions or gifts received from persons not residing in the dwelling;
All regular pay, special pay and allowances of a member of the Armed Forces (whether or
not living in the dwelling) who is head of the family or spouse.
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CalHome Operations Handbook (2008)
APPENDIX B
Appendix
B
Title 25 Section 6914 Gross Income Exclusions
(b)
The following items shall not be considered as income:
(1)
Casual, sporadic or irregular gifts;
(2)
Amounts which are specifically for or in reimbursement of the cost of medical
expenses;
(3)
Lump-sum additions to family assets, such as inheritances, insurance payments
(including payments under health and accident insurance and worker's
compensation), capital gains and settlement for personal or property losses;
(4)
Amounts of educational scholarships paid directly to the student or to the
educational institution, and amounts paid by the government to a veteran for
use in meeting the costs of tuition, fees, books and equipment. Any amounts of
such scholarships, or payments to veterans not used for the above purposes of
which are available for subsistence are to be included in income;
(5)
The special pay to a serviceman head of a family away from home and
exposed to hostile fire;
(6)
Relocation payments made pursuant to federal, state, or local relocation law;
(7)
Foster child care payments;
(8)
The value of coupon allotments for the purchase of food pursuant to the Food
Stamp Act of 1964 which is in excess of the amount actually charged the
eligible household;
(9)
Payments received pursuant to participation in the following volunteer
programs under the ACTION Agency:
(A) National Volunteer Antipoverty Programs which include VISTA, Service
Learning Programs and Special Volunteer Programs.
(B) National Older American Volunteer Programs for persons aged 60 and
over which include Retired Senior Volunteer Programs, Foster
Grandparent Program, Older American Community Services Program, and
National Volunteer Program to Assist Small Business Experience, Service
Corps of Retired Executive (SCORE) and Active Corps of Executives
(ACE).
7
CalHome Operations Handbook
(2008))
December
2014