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The Elk Grove City Council unanimously approved a first-time homebuyer assistance program for moderate-income residents that will provide low-interest, deferred-payment loans to first-time homebuyers in the city.
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The program is intended for Elk Grove residents making 81% to 120% of the area median income who have not owned a home in the past three years and qualify for prime financing.
Under the program, the income limit for a single-person household is $104,150, rising to $148,800 for a four-person household, Joshua Tovar, a management analyst for the city,
Tovar said this represents a “diverse” population of professions, including teachers, emergency dispatchers, medical assistants and people working in the trades.
“They all face a similar challenge in that they don’t have enough accumulated savings to get through the front door,” Tovar said.
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The maximum loan amount for a down payment would be $60,000 or 20% of a home’s purchase price, whichever is less, Tovar said. The interest rate will be 3% and will begin to be forgiven after 10 years to encourage residents to remain in their homes and Elk Grove long term. The principal will not be forgiven, and the loan will have a deferred-payment structure, meaning borrowers will not make monthly payments to the city.
The home must be located in Elk Grove and pass inspections to ensure it is safe and habitable. Buyers must contribute at least 1% of the home’s purchase price, and the maximum purchase price will be tied to Elk Grove’s median sales price for a single-family home and typically adjusted annually, Tovar said.
Buyers must attend educational classes on homeownership and finances before purchasing a home.
The home must be the buyer’s primary residence, and rentals will not be allowed. If a homeowner sells the property before the end of the 30-year term, the principal amount of the city’s assistance and any accrued interest must be repaid, according to Tovar.
About 90% of housing in Elk Grove is single-family, Tovar said, and the median home sale price recently was approximately $625,000.
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Tovar said those prices create a barrier to homeownership in Elk Grove and that the new program is intended to fill a gap in existing assistance.
The city has an existing program for low-income households earning less than 80% of the area median income, or less than $73,600 for a single-person household and $105,100 for a four-person household, according to Tovar.
The program has existed since 2009, providing low-interest deferred payment loans of up to $60,000 or 20% of the purchase price, whichever is less, Tovar said. Buyers must also contribute at least 1% of the home’s purchase price.
The low-income assistance program has helped 35 families purchase homes in Elk Grove, Tovar said.
Councilmember Sergio Robles said the new program would be an investment in the city and in Elk Grove residents.
“This is how we change somebody’s history,” Robles said.
The program will initially be funded with Permanent Local Housing Allocation funds from the California Department of Housing and Community Development. The city has set aside $400,000 from the funding source, which would cover at least six homebuyer loans, Tovar said.
Additional money from the city’s Measure E, a one-cent sales tax approved by voters in 2022 to fund community priorities, will be used as needed, Tovar said. As buyers repay the loans, the city will be able to use the repayments to fund additional loans.
City staff will now finalize the program guidelines and intend to launch the program in late 2026.
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