City of Johnstown First-Time Homebuyer Program

What Is the Program?

The Johnstown First-Time Homebuyer Program is a comprehensive homeownership assistance initiative funded by Community Development Block Grants from the U.S. Department of Housing and Urban Development. The program addresses the two biggest barriers to homeownership by offering favorable financing and substantial assistance for home improvements. This makes it possible for low- and moderate-income households to become homeowners while addressing necessary repairs and upgrades to the property.

Three Components of the Program

The Johnstown First-Time Homebuyer Program combines three forms of assistance to help you become a homeowner. Each component addresses a different aspect of the homeownership challenge.

Favorable Mortgage Rate

The program offers a mortgage at one point below the prime interest rate from one of the City's lending partners. This below-prime financing means you pay less interest over the life of your mortgage compared to standard market rates. On a $200,000 mortgage, this lower rate can save you thousands of dollars in total interest paid over 30 years.

Home Rehabilitation Assistance Loan

You can borrow up to $20,000 from the City of Johnstown to address code violations, lead-based paint hazards, and weatherization improvements. This funding allows you to purchase a home that needs repairs and improve it without paying out of pocket for rehabilitation work. The rehabilitation loan is structured with favorable terms designed to support homeowners on a modest budget.

Closing Cost Assistance

The program provides up to $3,000 in closing cost assistance, depending on qualifying factors. This reduces the out-of-pocket cash you need at closing, making homeownership more accessible. Closing costs typically range from 2% to 5% of the home purchase price, so this assistance covers a meaningful portion of your closing expenses.

How the Loans Work

Both the rehabilitation loan and the closing cost assistance are structured as favorable deferred loans. You do not make monthly payments on the rehabilitation loan during the lien period. Instead, the City places a lien on your property that is satisfied when you sell the home, refinance, or transfer the title. This structure keeps your monthly housing payment manageable while allowing you to access needed funds for home improvements.

Contingency Fund for Additional Repairs

The program includes a contingency fund equal to 10% of your original loan amount, available for one year after closing. If additional rehabilitation needs arise after you purchase the home, this contingency fund can address them without requiring you to find extra cash. This safety net helps protect your investment in your new home.

Eligibility Requirements

To qualify for the Johnstown First-Time Homebuyer Program, you must meet these basic requirements:

• Be a first-time homebuyer or have not owned other real estate in the past 3 years
• Meet the City's income guidelines based on HUD income thresholds
• Provide a 3% down payment from your own funds
• Be able to qualify for a mortgage through one of the City's lending partners
• Intend to use the property as your primary residence

Income Guidelines

Eligibility is based on HUD income thresholds for low- and moderate-income households. Income limits vary based on family size and area median income. Contact the City of Johnstown Residential Development Department at 814-539-2504, extension 115, to verify the current income limits for your household size.

Down Payment Requirement

The program requires you to provide a 3% down payment from your own funds. This modest requirement is significantly lower than the 10% to 20% down payment required by conventional mortgages. The below-prime mortgage financing covers the remaining purchase price, making homeownership more achievable for families with limited savings.

Loan Forgiveness Terms

The program offers loan forgiveness under certain conditions. The designated lien period is 10 years. If at the end of 10 years your property has not been sold and you have properly maintained it, the City may forgive the loans. This means you keep the benefits of the rehabilitation work and closing cost assistance without repaying the full amount. Consult the program guidelines for specific maintenance and occupancy requirements.

Using the Rehabilitation Funds

The rehabilitation loan can be used for several categories of work to improve your home:

• Addressing code violations to bring the home into compliance with local housing codes
• Removing lead-based paint hazards and lead-safe renovation work
• Weatherization improvements including insulation, windows, doors, and heating system upgrades

The City must approve the proposed rehabilitation work before funds are disbursed. This ensures the work addresses legitimate housing issues and improves the quality of your home.

The Application Process

Getting started with the Johnstown First-Time Homebuyer Program involves these steps:

• Contact the City of Johnstown Residential Development Department to request the application and guidelines
• Complete the First-Time Homebuyer application with income verification and financial information
• Verify you meet the income guidelines and other eligibility requirements
• Work with one of the City's lending partners to obtain pre-qualification for your mortgage
• Find a property that meets program requirements
• Submit the rehabilitation plan for City approval
• The City and lender will finalize the financing and rehabilitation arrangements
• Close on your home and begin work on approved improvements

Working with Approved Lenders

The below-prime mortgage is provided by one of the City's lending partners. Not all lenders participate in the program, so you will work with an approved lender selected by the City. The City will help you connect with an appropriate lender based on your financial situation and loan amount needed.

Frequently Asked Questions

Can I use the rehabilitation funds for any home improvements I want?

No. The rehabilitation loan can only be used for code violations, lead-based paint hazards, and weatherization improvements. The City must approve the work plan before funds are disbursed. This ensures the money is used to address serious housing issues.

What happens if I sell my home before 10 years?

If you sell your home before the 10-year lien period ends, you must repay the rehabilitation loan and any remaining closing cost assistance from your sale proceeds. The lender will coordinate with the City to ensure the lien is satisfied at closing.

Can I refinance my mortgage?

If you refinance your first mortgage before the 10-year lien period ends, you will still owe the rehabilitation loan and closing cost assistance to the City. The City's lien remains in place on the property. Consult with the City before refinancing to understand the implications.

What is the income limit for the program?

Income limits are based on HUD thresholds for low- and moderate-income households and vary by family size and county. Contact the City at 814-539-2504, extension 115, to learn the specific income limit for your household.

Do I have to buy a home in Johnstown?

Yes. The program is designed to encourage homeownership within the City of Johnstown. You must purchase a home located within the city limits.

What if the home I want to buy needs more than $20,000 in repairs?

The rehabilitation loan is limited to $20,000. If your home needs more extensive work, you may need to identify a property requiring fewer repairs or find additional funding sources to cover costs beyond the program limit.

Can I apply if I have poor credit?

The program requires you to qualify for a mortgage through an approved lender. Credit requirements are set by the lender, but the City's lending partners work with first-time homebuyers and may be more flexible than conventional lenders. Contact the City to discuss your situation.

Program Benefits

The Johnstown First-Time Homebuyer Program offers multiple advantages. The below-prime mortgage rate reduces your total borrowing cost over the life of the loan. The rehabilitation loan lets you purchase a home needing work without requiring you to save additional funds. The closing cost assistance and contingency fund provide financial cushion. The 10-year loan forgiveness terms reward you for maintaining your home and staying in the community.

Why Choose the Johnstown Program?

The Johnstown First-Time Homebuyer Program addresses the real barriers that prevent low- and moderate-income families from becoming homeowners. By combining favorable interest rates, substantial rehabilitation funding, and closing cost assistance, the program makes homeownership achievable. The program also demonstrates the City's commitment to revitalization by encouraging homeownership and property improvement in Johnstown neighborhoods.