What’s BMR and who can qualify?

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I have been asked many times for a question about low-income housing or BMR, such as, “What’s BMR?” or, “Who can apply?” As I have recently helped a client purchased their home under the BMR, here’s an explanation of the program, and how to prepare for the application.

BMR (Below Market Rate) is a homeownership program that provides housing to low and median income families. Therefore, there’re sets of rules such as annual income, assets, first-time home buyer, credit score, debt to income ratio, and homeowner occupancy, etc. Only a household meets those requirements will be considered for the application. The price for this kind of home doesn’t depend on the comparable sales around the neighborhood, but it depends on AMI (area median income). Due to the high demand and low supply, multiple-offer is a common situation in this kind of listing. The BMR house usually has a fixed sales price, which means no overbidding is allowed even in the multiple offer situation. This creates even more challenges to the homebuyer, as no one can offer a higher price to win over the competition. Therefore, to work with an experienced real estate professional on the BMR property is essential.

The process of the BMR purchase is also different than the regular home sale. First, the homebuyer needs to download an application packet from the city website and review the qualification requirements. Second, the buyer needs to work with a lender to get pre-qualified to purchase a home. Please note that the potential financing must meet the city’s requirement. The homebuyer will complete a mandated first-time homebuyer class. Then, work with the real estate agent to find a desirable home for sale, prepare the offer, and submit it to the listing agent. After the offer close date, the city will request a copy of the ratified contract from the seller/listing agent. If the offer is selected to move forward with the seller, the buyer will need to submit a BMR homeownership application to the city’s housing division. Be sure to include supporting documentation for income and asset verification. The city will review the application and qualification materials and determine the eligibility within 10 business days of receipt of completed application. Once it’s qualified, all adult members of the approved household must schedule an in-person consultation with city staff to discuss resale restrictions and ongoing requirements. After the interview, city staff will prepare escrow instructions and submit them to the escrow officer. Buyer will sign the appropriate documents at closing.

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