The City provides below-market financing for the purchase of newly constructed homes in redevelopment areas and in city-assisted subdivisions. The two principal programs, both of which are used in conjunction with private conventional, FHA, or VA mortgage loans, are described as follows:
The Second Mortgage program combines two low-interest loans to make the purchase of a newly constructed home affordable for moderate-income households. The applicant borrows 70% of the cost of the home from a local mortgage lender at a fixed, conventional interest rate for a fifteen - (15) year term. The remaining 30% is borrowed from the City of Winston-Salem at a 5% rate for a five - (5) year term. Payments on the second mortgage do not begin until the first is paid in full.
An applicant's borrowing capacity is based only on the amount of the first mortgage loan, thereby allowing lower income households to qualify to purchase a home. Also, the mortgage payment is based only on the amount of the first mortgage, resulting in a lower monthly payment.
The program requires that the applicant make a 3% downpayment plus pay the first $1,000 of closing costs. The remaining closing costs can be financed in the first and second mortgage loans.
An alternative program is the HOME Downpayment and 2nd Mortgage program that is used with FHA, VA, & conventional loans of up to 30 years. The loan eligibility amount of up to $8,600 is based on income and family size. The 2nd mortgage is deferred and not due until the home is sold or transferred.
For more information on new construction sites and financing:
Deidre Pender at 336-734-1508