For One Buyer, County Bond Program Made the Difference

When computer programmer David Hall set out last year in pursuit of the American Dream, his low salary brought him luck: a home of his own.

Hall, 25, made less than 80% of the median income in Orange County--currently $39,500 per year. But he did make enough to meet the monthly mortgage payments under the county’s bond program.

“I qualified for the smallest” unit available at the Villa Mira development in Laguna Niguel, Hall recalled. It was a two-bedroom, one-bath unit priced at $80,000.

Smaller Model Offered

Those making from 80% to 100% of the median income could choose the two-bed, two-bath model. Those in the 100% to 120% bracket were steered to the three-bedroom units.

“I was just $500 short of that (80%) limit, so I almost went over,” Hall said, which would have meant that he was making too much money to be eligible for the least-expensive unit. But he couldn’t have afforded the more expensive models.

Even at the lower end, after a 10% down payment, Hall said his income was just enough to let him make the monthly mortgage payments.

“When I went to qualify for the loan, I barely made it on my income without having a co-signer (on the loan),” he said. “Even with the affordable (incentives), it still made that rather close.”

Linda J. Scarberry, director of sales and marketing for Carma-Sandling Group, builders of the Villa Mira and other developments, said monthly mortgage payments under the bond program can amount to a maximum of one-third of a buyer’s monthly gross income.

38% of Monthly Gross

No more than 38% of the monthly gross can go for mortgage, car payments, revolving credit-card payments, estimated utilities and homeowners’ association dues.

The figures represent “a narrow qualifying window for your buyers,” Scarberry said. “You’re talking about first-time buyers. They’re very young people and saving money is not one of their priorities.”

That often means that they don’t have enough money to make a larger down payment, which would reduce the amount of the mortgage and thus the amount of monthly payments required.

Hall said the $80,000 price on his condominium was “a good price to begin with, but I’m single and with conventional financing I couldn’t have afforded that (payment), so the bond rate was really what made it possible.”

Interest at 9.5%

Hall wound up paying 9.5% interest for a 30-year, fixed-rate mortgage at a time when the conventional rate was about 13%.

He was one of the first to move into what will be a 216-unit development, and has already seen his condo appreciate in value. The current price for Villa Mira units ranges from $89,900 to $107,000, Scarberry said.

Hall said he has no regrets about moving from his parents’ home in Mission Viejo to his own condo.

“Right now (the mortgage payment) is a little higher than I would be paying if I had an apartment, but in a year it won’t be.”