What is the San Juan Community Home Trust?
- The Home Trust is a non-profit organization. Our members and supporters are thinking about the future of San Juan Island. They are committed to community preservation through forever affordable homes.
Who buys Home Trust homes?
- Our applicants are people who live and work in San Juan County and cannot otherwise afford to purchase a market rate home. Applicants who qualify must have lived on San Juan Island for three years or under certain circumstances may be eligible within two years.
Why create permanently affordable housing?
- Homeownership creates stability for employers, families, and individuals.
- Homeownership creates security, a sense of community, pride of ownership, equity and legacy.
- Government grant funds for homes are available only for those earning 80% or less of area median income (for a family of 4, approximately $53,000). This is considered “low-income.”
- The Home Trust’s mission also allows us to serve moderate income people, as long as some portion is privately funded, such as through employer partnerships.
How are Home Trust Homes Funded?
- By private donations, large and small.
- By Washington State Housing Trust Fund Grants, up to $55,000.00 per unit.*
- By Federal SHOP (Self-Help Opportunity Program) Grants, $15,000.00 per unit.*
- By other Grants from both Public and Private sources.
- By application for a grant/loan from San Juan County of up to $5,000.00 if available.
*Government (State and Federal) grant funds for homes are available only for those earning 80% or less of the area median income. For a family of 4, that is approximately $53,000.00 or less. This is considered “low-income.”
How does the Home Trust program work?
- The Home Trust acquires land, develops homes, qualifies applicants, packages mortgages and provides homebuyer education classes.
- In Salal, ownership of land is retained by the Home Trust and leased to homeowners through a 99-year, renewable ground lease.
- In Sun Rise, the buildings and land are owned in common by the residents and kept affordable over the long term by a using deed restriction called a Permanent Affordability Covenant. The same resale formula used to determine sale prices of homes in Salal is used for those in Sun Rise. The resale price is restricted using an index tied to Area Median Income. (see Resale Formula)
- Homes must be “affordable” to income eligible applicants. No more than 31% of monthly income can be spent on principal, interest, taxes and insurance.
- State and Federal 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 by a restrictive resale formula.
- In Salal, homeowners purchase improvements on the land but not the land itself.
- In Sun Rise, homeowners purchase the interior improvements of the home but not the building itself or the land on which it is built.
What if I (or my family) earn more than 80% of the Area Median Income (AMI)?
In some cases our developments contain a limited number of homes for moderate income earners.
Is there Sweat equity involved?
Yes, if you are the initial owner of a Home Trust home for which the Home Trust has received a $15,000.00 subsidy from the Federal Government in the form of a SHOP grant. In that case, you are required to put in 50 hours of “sweat equity.”
Are there any Subsidies or grants available to prospective homebuyers?
Homebuyers may be eligible for a $5,000.00 savings grant/loan from San Juan County.
What are the requirements for becoming a Homeowner?
- Must earn sufficient income to make mortgage payments and Homeowner/Condo fees 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, low-income homebuyers.
- May be eligible for down-payment assistance programs for first-time homebuyers, low-income homebuyers.
- Homebuyer debt payments (including housing) can be no more than 41% of adjusted gross income.
What are the Responsibilities of Homeowners?
- To landscape their personal yard areas and share in the use and maintenance of common areas.
- To pay a monthly fee to the Home Trust for maintenance reserves, insuring long-term upkeep on the home and common areas.
- To pay a $15.00 monthly administrative fee to the Home Trust.
- To maintain the home in good condition.
What are the Benefits of being a Homeowner of a Home Trust Home?
- Building equity and share in the increasing value of the home.
- Having the help and support of your fellow community members.
- Having resources available through the Home Trust Staff.
How Does the Resale Formula Work?
At time of resale, the Home Trust and homeowner(s) jointly calculate the resale formula to determine the new sales price of the home with the restriction that the current owner must sell to other income-eligible applicants.
The resale formula is determined by using the change of percentage of increase of Area Median Income (AMI) from time of purchase to time of sale.
To understand the resale formula using the AMI, use this formula to calculate:
Original Price + % ( AMI increase) of Original Price = new Sale Price. To illustrate: suppose the AMI has increased 10% since the date the house was purchased. If the house initially sold for $136,000.00, you would calculate 10% of that amount, which would equal $13,600. You would then add the original purchase price, $136,000 and the amount of increase, $13,600, to come up with the sale price of $149,600.00. $136,000 + $13,600 = $149,600
Please note: The seller of the home is entitled to all of the proceeds of the sale of their house, minus outstanding mortgage loans and costs of any repairs necessary to return the home to the Home Trust’s standard for resale.
ONLY by restricting the resale price in this way, can the home can be kept affordable to those earning island wages, FOREVER!
Why are Home Trust Homes priced under Market or Appraised Value?
- All Home Trust homes are sold far below their appraised market value
- All Home Trust homes are endowed with a subsidy through private donations and government or private grants.
1. Equity in any home is built over the long term; without longevity of ownership there is little or no equity.
2. Only by restricting the resale price can each Home Trust home be kept affordable – Forever!