Homeownership Program Term Changes

What is changing in the City's Affordable Homeownership Program?

The terms for the homeownership program are changing in two areas:

1. How the value increases over time – the “Resale Formula”:

• Most restrictions currently use a “Return on Equity” formula. The annual increase is based on the amount of equity in the home, multiplied by an interest rate based on a Treasury Bill rate.
• “Equity” is the difference between the original affordable price and the current balance of loans on the property, including refinancing.
• The new formula increases by 2.5% of the original affordable purchase price for each year of ownership. 
• The “original affordable purchase price” does not include funds from City programs to reduce the price, including CHBI, Financial Assistance, HomeBridge, and Buydown Assistance funds.
• The updated maximum amount of capital improvement reimbursement at the time of sale is $5,000 for each year of ownership. In most current restrictions, the maximum is currently 1% of the original purchase price.
• In most cases, the new formula will result in a higher current affordable value.

2. Inheritance rules:

• Currently, ownership of an affordable home cannot be passed down directly. Owners can leave the home to anyone, but it must then be sold to an eligible buyer and the heirs keep the sales proceeds.
• The new terms allow transfer of a home through inheritance to an heir if:
  • They either live in the home as their only residence at the time of the owner’s death; or are the owner’s child or other former dependent who previously lived in the home, even if living elsewhere; and
  • Their household is income-eligible; and
  • They receive a Certificate of Eligibility from the City no more than 120 days before the transfer; and
  • They sign an Affordable Housing Covenant before becoming the new owner.

All other program terms and requirements remain unchanged.

These new terms are required for all new buyers but are optional for current owners. Owners can choose whether to change to the new terms.

Homeowners do not need to make a decision now. Owners can change to the new terms as long as these terms are being used for new buyers. If the program terms are updated again, current owners will be notified in advance.

I want to change to the new terms. What do I do?

• You must sign an Amendment to your Affordable Housing Restriction.
• Start by filling out this request form:  https://app.smartsheet.com/b/form/c40adef27ec24ec8866dd7d9be1f8440 
• The Housing Department will send you the Amendment for your review. 
• Two copies of the Amendment must be signed by all owners on the deed and notarized.
• The Amendment is returned to the Housing Department for City signatures.
• After signing, it must be filed at the Middlesex South Registry of Deeds.
• Please note: this process may take several months.

I’m not sure if I want to change. What are my options?

Before you decide, you can:

• Attend a virtual information session (registration below) or watch a virtual information session (link below). 
• Request a comparison of your home’s estimated value under the current resale formula and the new 2.5% resale formula. To request a comparison, fill out this form: https://app.smartsheet.com/b/form/845ff5b17dd7438891279189d5e9dd09

You can review a sample Amendment here.

***This is an example of the legal document owners will sign to update the existing affordable housing restriction to change to the new terms. This is a sample only; each unit requires an Amendment specific to their unit and restriction. This form cannot be used to change to the new terms. Owners must request an Amendment using the Amendment Request Form.***

Information Sessions

The Housing Department will hold four virtual 90-minute information sessions to provide an overview of the new terms; compare the new terms with the current terms; and discuss next steps. Preregistration is required. Register for one of the sessions:

Session One:     Thursday, November 20th at 5:30 pm 

Session Two:      Wednesday, December 3rd at 12:00 noon

Session Three:   Monday, December 8th at 6:00 pm

Session Four:     Saturday, December 13th at 10:30 am

Or watch a prerecorded information session.

Additional Resources 

• Glossary of terms [PDF]
• Frequently Asked Questions [PDF]
• Middlesex County Registry of Deeds
  • Homeowners can access a copy of their current affordable housing restriction by searching under Name or Address.
  • The restriction will usually be listed as an “Agreement” or “Covenant” and is typically dated the same day as you bought your home.

Questions? 

For questions or additional information, please contact us at homeownership@cambridgema.gov or 617/349-4622.