Frequently Asked Questions Quick Links
What is a Community Land Trust?
Community Land Trusts help low and moderate income families benefit from the equity built through home ownership, and at the same time preserve the affordability of these homes so that future residents will have the same affordable home ownership opportunities. The Community Land Trust model is utilized by First Homes:
- to provide individuals and families access to owning a home who are otherwise denied because of income level or low downpayment access
- retaining the public's investment for housing
- to preserve the affordability of housing permanently.
A Community Land Trust (CLT) creates affordable housing by taking the cost of land out of the purchase price of a home. It keeps housing affordable for future buyers by controlling the resale price of houses on CLT land through a ground lease and resale formula. Home owners leasing CLT land under their home enjoy the security, control, tax advantages and ability to build equity just like any home owner. If they sell their home, the resale formula insures that the home remains affordable for the next family.
How do I get approval for a loan?
Contact one of the lenders listed
The Lenders/Banks listed are approved to process First Homes CLT loans and MN Housing Down Payment Assistance.
Is there down payment assistance?
Yes! First Homes works in partnership with Minnesota Housing to provide down payment and closing cost assistance to buyers that are under the income guidelines based on household size. MN Housing is an excellent resource for buyers.
Also, based on funding resources, First Homes has GAP funding for down payment up to $12,000 if needed and determined by the Lender.
Down payment assistance is due and payable when homeowner sells, refinances, or pays off the 1st mortgage.
What are the income and asset limits?
First Homes serves those at or below 80% area median income (AMI.) These limts are updated every year using information from the Department of Housing and Urban Development (HUD.) View the latest income limits here.
Becuase it is an income-qualified program, First Homes has an asset limit of $50,000, not including retirement accounts, and we do not accept cash offers.
What about taxes?
CLT homeowners pay all the taxes and assessments associated with their property. As with all homeowners, the interest portion of their mortgage payment is tax deductible. If you itemize your federal income taxes, the property taxes that are paid also are tax deductible.
What is the Ground Lease?
The Ground Lease is a monthly payment made by the homeowner to First Homes that allows the homeowner to secure, long-term rights to the land the house sits on. Therefore, the CLT homeowners have exclusive use of the land, and they have full responsibility for the property and its upkeep.
How does CLT homeownership work?
The CLT essentially removes the market value of the land from the pricing equation for the home, making it more affordable. The CLT keeps ownership of the land the house sits on and leases the use of that land to the homeowner. Purchasing a CLT home requires the homeowner to sell to another low-to-moderate-income household. CLT homeowners maintain the ability to build equity, pass on the home to their heirs, and receive applicable federal and property tax deductions.
How does CLT homeownership compare to conventional homeownership?
- The homeowner has a mortgage with a bank
- The homeowner accumulates equity
- The homeowner pays property taxes
- The homeowner can make alterations and improvements
- The homeowner receives federal tax deductions for mortgage interest and property taxes
- The purchase price is lower because the land is not purchased by the homeowner
- Generally the buyer does not pay Private Mortgage Insurance (PMI)
- The CLT owns the land, the homeowner leases the land
What are the benefits of CLT homeownership?
- Affordability - CLT homes are more affordable than homes purchased on the open real estate market and provide a sense of stability and community.
- Community - CLT homeowners will have the support of the neighborhood in which they reside.
- Knowledgeable Staff - CLT homebuyers have the support of the First Homes staff with resources regarding financial problems and foreclosure prevention.
What is the process for selling a CLT home?
When a homeowner wants to sell his or her home, the seller commissions an independent appraisal to establish the market value of the home to determine the next sale price. Essentially, in exchange for buying a home at an affordable price, the homeowner agrees to sell the home at an affordable price. This preserves the affordability for the next family who buys the home.
Can I make improvements on my CLT home?
Yes! When making improvements to your home it may require a building permit from the city in which you live. Upgrades/improvements that require permits are; Plumbing, Electrical, HVAC and Structural Changes. Contact your city administration or building department to apply for a building permit.
First Homes will need a copy of the permit before the work is started. Building permits assure the work is inspected and completed correctly which will help sell your home when that time comes.
Does the CLT ever sell the land?
You will not be able to purchase the land on which your home is built. At First Homes, we provide a 99-year renewable land lease to the home owner. As the house is truly their own, is provides the home owners with the same permanence and security as a conventional buyer, and they can use the land in the same way as any other home owner.
What happens to the CLT's land and lease agreements if the CLT is dissolved?
If First Homes is dissolved and ownership of the land is transferred, the new owner is obligated to honor the long-term lease agreements between First Homes and its homeowners. Should the land ever be offered to a non-charitable buyer, the resident has the right of first refusal to buy the land.