CDBG Entitlement FAQ

If the city is providing CDBG down payment assistance, is the grantee required to ensure that no more than 30% of the beneficiary’s income be spent on housing to ensure affordability?

Date Published: May 2015

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No, when providing homebuyer assistance, grantees are not required to ensure that applicant households pay no more than 30 percent of household income for housing expense. However, it is important to review a homebuyer's income and expenses, even when providing limited financial assistance such as down payment assistance, to help prevent applicants from entering into financial commitments that they will not be able to sustain over time. Grantees often review the terms of the first mortgage to ensure that it appears to be reasonable and affordable (e.g., no large balloon payments or negative amortization) and may also request the first lender provide the results of its underwriting analysis.

Tags: CDBG Entitlement Program Homebuyer Assistance