Home Trust FAQs

What is the San Juan Community Home Trust?

The Home Trust is a non-profit organization whose members care about the future of San Juan Island and are committed to community preservation through forever affordable homes.

Whom does the Home Trust serve?

• People who live and work in San Juan County and cannot afford a market rate home.

Why create permanently affordable housing?

• Homeownership creates stability for employers, families, and individuals.
• Homeownership creates security, decent housing, a sense of community, pride of ownership, and legacy (homes can be passed on to heirs. Heirs must be income-eligible to live in the home, or must sell it.)
• Government grant funds for homes are available only for those earning 80% or less of area median income. (for a family of 4, approximately $48,000.) This is considered “low-income.”
• The Home Trust’s mission would also allow us to serve moderate income people, if private funding were available, such as through employer partnerships.

How does the Home Trust program work?

• The Home Trust acquires land, builds homes, qualifies applicants, packages mortgages and provides homebuyer education classes.
• Ownership of land is retained by the Home Trust and leased to homeowners through a 99-year, renewable ground lease.
• Homes must be “affordable” to income eligible applicants. (no more than 30% of monthly income can be spent on mortgage, taxes and insurance.)
• Grants of up to $55,000 per unit are available. These grants go towards the home’s construction and are not a windfall to the first buyer, but stay with the home in perpetuity.
• The Home Trust fundraises to fill the gap between homebuyer mortgages and government grants.
• The subsidy is rolled over to each successive buyer into the future by a restrictive resale formula. (see example, below)

What are the requirements for becoming a Homeowner?

HOMEOWNERS:

• Must earn sufficient income to make mortgage payments and have a credit history that qualifies them for available mortgages.
• May be eligible to obtain a low-interest mortgage available only to first time homebuyers.
• May be eligible for downpayment assistance programs for first-time, low-income homebuyers.
• Purchase improvements only  on the land, not the land itself.
• Landscape their personal yard areas, and share in the use and maintenance of common areas.
• Pay a monthly fee to Home Trust to maintenance reserves, insuring long-term upkeep on the home and common areas.
• Currently pay no fee for land rent; and only a $15/month administrative fee to Home Trust.
• Build equity and share in the increasing value of home (unlike renting).
• At time of resale, homebuyers must use the resale formula to determine the new price, and sell to other income-eligible applicants. (see example of formula, below.)

EXAMPLE OF RESALE FORMULA

A 3-bedroom home in the Salal Neighborhood recently sold for $136,000. (The same home was appraised at $263,000.) Let’s say the owner decides to sell in 10 years. Our formula says that the resale price will be EITHER 25% of the increase in appraised value, OR the percent increase in area median income (AMI), WHICHEVER IS LOWER.

Since home prices have been increasing much faster than area median income, it is likely that this index (AMI) will determine the price. Assuming that area median income rises by 10% in ten years, the new sale price would be the original purchase price plus 10% of the original purchase price or $149,600 ($136,000 + $13,600.) Therefore, it is still affordable to those in the same income category.

Using the appraised value example, if in ten years the appraised value of the home rose by $100,000, to $363,000, the new sale price would be 25% of the increase, or $136,000 + $25,000 = $161,000.

In both examples, the homebuyer is entitled to all the proceeds (minus outstanding mortgage loans.)