General Requirements and Definitions

Loan Availability is restricted to owner-occupants for rehabilitation of substandard dwellings that are the principal residences of the borrowers.

Only properties located within East Baton Rouge Parish, but not including the corporate areas of Baker and Zachary. Only single family detached dwellings.

Restricted to properties occupied by lower income households:   Defined as gross household income that does not exceed 80% of the HUD-determined median household income for East Baton Rouge Parish, adjusted for family size.

Property must be substandard at the time of application:   Defined as housing that contains violations of the City-Parish Housing Code and/or of HUD Housing Quality Standards such that the minimum cost of repairing such violations are no less than $1,000. Property must be repairable to City-Parish Code Standards within the available loan amount .

Property, with rehabilitation loan debt, must be affordable for the borrower. Affordability is defined as the total annual cost of all housing mortgage principal and interest payments, taxes, and property insurance that do not exceed 30% of gross income.

Basic Loan Terms

1. Lending is subject to the availability of loan funds at the time of a loan decision.

2. Annual interest rate of 3.0% for borrowers with gross household incomes above 50% but below 80% of area median, adjusted for family size.

3. Principal only (0.0%APR) loans for borrowers below 50% of area median, adjusted for family size.

4. Repayment period of up to 20 years.

5. All loans secured by mortgage on the rehabilitated property.

6. Mortgages may be a first or second lien position. Refinancing of existing property debt is not eligible.

7. Outstanding balance due upon sale or other transfer of the property.

8. Applicants must have satisfactory credit history and income to meet OCD loan underwriting and housing cost affordability criteria.

9. In addition to the defined 30% housing cost affordability restriction, a 40% debt-to-income ratio applies in credit underwriting.

10. Property hazard insurance required throughout the term of the loan. City-Parish named as mortgage holder, loss payee on the policy.

11. If located within the 100 year floodplain, flood insurance is required for the term of the loan. City-Parish named as mortgage holder, loss payee on the policy.

12. No pre-payment penalty for early payout of the loan.

13. No loan application fees, origination nor discount points charged for the loan.

14. All properties subject to appraisal prior to loan approval. Appraisal must include an as repaired valuation. Lending decision will consider the as repaired valuation.

15. All costs of loan closing (e.g., legal, recordation, appraisal, etc.) are those of the borrower. (Such costs may be included in the loan financing, if requested and within lending criteria).

Eligible Uses of Funds

• Property rehabilitation costs (both hard construction costs and directly related soft costs such as design fees.

• Only those property improvements necessary and reasonable to repair substandard housing to City-Parish Code and HUD Housing Quality Standards. Eligible rehabilitation costs do not include improvements/amenities that are above those standard quality housing within the area.

• Additions are only eligible if found by OCD to be necessary to alleviate overcrowding (generally defined as more than 2 persons per habitable room).

• All or a portion of customary and reasonable closing costs of the loan.

Other

• Loan agreements with the borrower are executed prior to formal loan closing, said agreements further setting forth the terms and conditions of the loan financing.

• All rehabilitation construction must conform to OCD Property Rehabilitation Standards and Specifications.

• No construction funds disbursed at loan closing. All construction is monitored by OCD. Disbursements made as costs are incurred and wok is satisfactorily completed.

• All construction work must be performed by properly licensed trades for the appropriate work.

• No interest charged during a defined rehabilitation construction period.

• Household income figures for low or moderate income eligibility purposes are typically revised annually. See the linked table for the current limits.

Household Income Table