City to Issue $5 Million In Grants Homebuyers

CBS (CHICAGO)--The City Of Chicago Monday announced a pilot program to encourage homebuyers to move to several city neighborhoods that lack residential development.

Homebuyers in certain income brackets will be eligible to get between $40,000 and $60,000 in assistance from the city through The "Building Neighborhoods and Affordable Homes Program."

The program imposes restrictions on where homebuyers can live, however.

Only new-construction homes built on vacant lots in areas where the housing market is still slow will be eligible.

The city says homebuyers in Englewood, Lawndale, Little Village, Humboldt Park/Garfield Park and Woodlawn can receive purchase-price assistance to buy homes that were built through the "City Lots for Working Families" program, which lets single-family home developers buy vacant lots owned by the city for $1.

"This pilot program is a win-win--it will double down on the investments we are making in Chicago's neighborhoods while turning vacant lots into new and affordable homes," Mayor Emanuel said in a statement. "Programs like this are part of the all-of-the-above approach we are taking to create economic development and support affordable housing across Chicago."

The program is designed to help local residents purchase a new home in areas where property values are typically worth less than the cost to develop new residential dwellings.

The $5 million pilot program is funded through the City's Affordable Housing Opportunity Fund, which receives fees from developers that are subject to the the city's Affordable Requirements Ordinance.

Homebuyers will be required to independently qualify for private mortgages and meet certain income requirements, the city says.

The assistance is structured as a forgivable grant over 10 years. How much homebuyers qualify for depends on a survey of both the local market cost to build and average sale prices.