Your Road Home: CHFA Homeownership eNews

affordable options: land-trust homes

Finding an affordable option for homeownership in Colorado can be a challenge with high home prices and inventory strain; however, there are unique programs designed to help bring affordability within reach. One such option is buying a home through a community land trust (CLT), which provides shared benefits to homebuyers and the community.

What is a CLT?

A CLT is generally made available through a nonprofit organization that owns land, which is used to benefit a community. To provide affordable housing, the nonprofit builds homes on its land, then sells homes at a price that is lower than the market rate, while leasing the land to the homeowners. The homeowner owns only the home and not the land on which the home sits.

Shared Equity

CLTs use a shared equity model. This means the buyer shares the equity with the CLT in exchange for the opportunity to become a homeowner at a more affordable price point than a market-rate home. The end goal is to maintain the land use for affordable housing so future households may have the same opportunity for affordable homeownership and to build equity in their home depending on current market conditions.

Resale Formula

Since program terms may vary, it’s important to understand the requirements or restrictions specific to the given land trust program. It’s particularly vital to understand the resale formula prior to purchase, as this determines how much equity you are contractually entitled to. Below is an example, which shows how the formula may work if the owner retains 25 percent of the equity:

According to the National Housing Conference, there are approximately 200 community land trusts nationwide. In Colorado, community land trusts include Colorado Community Land Trust, Rocky Mountain Community Land Trust, and Elevation Community Land Trust. While there may not be an abundance of homes available through land trusts, researching local programs and considering them as a potential option for homeownership may be worthwhile.

direct effect awards support homebuyers and homeowners

CHFA recently announced its 2022 Round Two Direct Effect Awards, which contributed more than $730,000 to 54 nonprofits throughout Colorado.

A number of nonprofits awarded work to assist homebuyers and/or homeowners, including:

Home Trust of Ouray County - $15,000

The mission of the Home Trust of Ouray County is to grow an inclusive, economically diverse community by providing permanently affordable housing and housing-related resources to households with moderate income through the stewardship of community assets. In order to help Coloradans access affordable housing and childcare services, they have acquired land, partnered with Habitat for Humanity of the San Juans and FCI Constructors to develop the land, and created a Homebuyer Opportunity Fund to offer down payment assistance to income-qualified homebuyers. CHFA’s Direct Effect Award will be used for general operating expenses.

Housing Solutions for the Southwest - $15,000

Housing Solutions for the Southwest is dedicated to finding affordable housing options for the communities they serve. They provide funding for rehabilitation of homes for homeowners with low and moderate income; operate the CIP Program, which replaces heating systems at no cost to homeowners with low income; are a HUD-certified housing counseling agency with housing counselors on staff; and provide the only reverse mortgage counseling in the region. CHFA’s Direct Effect Award will help fund a server replacement and data management system intended to cover a large portion their programming.

Project I See You - $5,000

Project I See You creates spaces where women can awaken inwardly, express vulnerability outwardly, and change the communities they’re a part of dramatically. CHFA’s Direct Effect Award will support their Shared Power program, which helps first-time female homebuyers rise to become wise and sustainable homeowners through down payment assistance. It focuses on women of color who live between surviving and thriving: they earn sufficient income for a mortgage but lack access to any other financial support for a down payment and move-in costs.

To learn more about CHFA’s Direct Effect Awards and all recipients, please visit chfainfo.com/directeffect.

Free CHFA webinar

Attend a free, one-hour webinar to learn the steps to homeownership and about CHFA’s homeownership programs.

Learn more

Online resources

Learn more about and prepare for homeownership:

Help for Homebuyers

Mi Hogar

Colorado Housing and Finance Authority

www.chfainfo.com

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