Applicants must be income eligible and the purchased home must be their principle place of residence. The program places a preference on the purchase of existing units. The principle on the second mortgage is deferred for 10 years and public funds are used to pay for most of its interest during the first five years. Local banks agree to discount the interest rate, charge no points and reduce closing costs on thirty fixed rate mortgages. Additionally the SSLP eliminates payment of private mortgage insurance.
Banks can sell the first mortgage to the secondary market or retain ownership.
The loan lost reserve is paid to the bank at the time of the closing. It expands housing opportunities and is bringing homebuyers into the market that would otherwise be left out. HAC pre-certifies the eligibility of potential buyers, tracts the progress of applicants and conducts the homebuyers workshops which all participants are required to attend. The Commission is responsible for the overall administration of the Soft Second Loan Program. The soft second mortgage interest subsidy is provided by the state's Department of Housing and Community Development.