Hey there! Navigating the home-buying process can feel overwhelming, especially when you’re trying to make sense of various assistance programs. Let’s chat about the Low Income Purchase Assistance (LIPA) Program offered by the City of Los Angeles Housing Department (LAHD). This initiative is designed to help first-time, low-income homebuyers like you achieve the dream of owning a home in Los Angeles.

Program Overview

The LIPA Program provides a deferred-payment loan of up to $161,000 to assist with down payment, closing costs, and acquisition expenses. This means you won’t have to make monthly payments on this loan, and it carries zero percent interest. However, there is a shared appreciation component, meaning the city will share a certain percentage of any increase in the property’s value when it’s sold or transferred.

Eligibility Criteria

To qualify for the LIPA Program, you need to meet the following requirements:

• First-Time Homebuyer: You haven’t owned any real property in the past three years.
• Income Limits: Your total household income must be at or below the specified limits, which vary based on household size.
• Credit Score: A minimum middle FICO score of 660 is required.
• U.S. Citizenship or Qualified Alien Status: Applicants must be U.S. citizens, lawful permanent residents, or other qualified aliens.
• Homebuyer Education: Completion of an 8-hour, in-person Homebuyer Education Class from an approved provider is mandatory.
• Personal Investment: You must contribute at least 1% of the home’s purchase price from your own funds as a down payment.

Benefits

• Substantial Financial Assistance: With up to $161,000 available, this program can significantly reduce the financial barriers to homeownership.
• Deferred, Zero-Interest Loan: No monthly payments are required, and the loan accrues no interest.
• Potential for Additional Support: Eligible applicants may also be required to apply for the Mortgage Credit Certificate (MCC) Program, which offers a federal income tax credit.

Potential Drawbacks

• Shared Appreciation: Upon selling or transferring the property, you’ll need to share a portion of the property’s appreciated value with the city.
• Property Restrictions: The home must be a single-unit property within Los Angeles and cannot be tenant-occupied unless you’re the tenant.
• Funding Limitations: The program operates on a first-come, first-served basis, and funds may be limited.

Application Process

1. Pre-Qualification: Contact one of LAHD’s Participating Lenders to get pre-qualified for a first mortgage and the city loan.
2. Homebuyer Education: Enroll in and complete the required 8-hour Homebuyer Education Class.
3. Property Selection: Find a qualifying property within Los Angeles that meets the program’s criteria.
4. Application Submission: Submit your application through your lender for review by LAHD.

Category

California

Subcategory

Los Angeles County

Sources

• City of Los Angeles Housing Department (LAHD)
• LAHD Homebuyers Program Page