Denver’s Affordable Housing Program / Deed Restricted

The term Deed Restricted comes from the Inclusionary Housing Ordinance passed by Denver City Council passed in 2002. Deed Restricted housing in Denver real estate terms is the same as Income Qualified, Affordable or Work Force Housing and they are all references to the City of Denver’s Affordable Housing Program. This program is actually an Affordable Housing Covenant that has restrictions on maximum allowable income of a buyer, sets maximum allowable sales price on future sale of the property and requires that the owner occupy the property as a primary residence.

In Denver, private real estate developers that build projects of 30 or more units are required to offer a number of units as affordable homes within their housing development. Historically speaking Denver’s property values have increased faster than average salaries. The affordable housing program (covenant) exists to ensure that there will be housing in central Denver that moderate-income buyers can afford, now and in the future.

A buyer must submit an application to become eligible to purchase an Income Qualified Home. An eligible buyers must make less than or equal to 80% of the Denver area median income. The income cap for buyers also varies according to the number of people in the household. To get an idea of income limits take a look at the Area Median Income at 80% based on the number of people in your household:

Income qualifying buyers are able to purchase a property in an area (or building) that they may have been priced out of at normal market prices. The property deed is restricted to only be transferred to other income qualified buyers, for now and in the future.

This deed restriction can be forever or for a specific amount of time (20 years, 30 years) and varies with each development. What does this mean to a buyer? If you buy an affordable property you most likely have to sell it deed restricted as well. When it is time to sell a seller must submit a Maximum Resale Price request form to the City of Denver. They will calculate the maximum price the unit can be sold.

To buy an affordable housing home a buyer must be able to qualify for a mortgage loan on there own however they are allowed to seek assistance from programs approved by the City of Denver or accept gifts from a friend or relative. To be eligible for an Income Qualified Home a buyer must complete an application and provide documentation.

Here are points to remember about Denver’s Affordable Housing Program:
• To buy an affordable housing unit a buyer must be an income eligible buyer
• A buyer’s income eligibility will be reviewed through an application and other income documentation that they must submit to the City
• The buyer must live in the unit as their primary residence, no renting the unit
• The owner can rent out a room but still must live in the property as well
• Future sale of the unit is limited to eligible buyers that must submit application to the City
• Resale price will be limited in accordance to the Covenant, to ensure prices of these affordable units continue to be affordable
• A Maximum Resale Price form must be submitted and upon review a maximum resale price will be given to the buyer
• Upon successful sale an affordable housing property may have a profit sharing requirement in which the seller shares profits with the City and/or the developer.
This list is a snapshot of the bigger picture, buying a property in Denver using the Affordable Housing Program may be the perfect way to own in your ideal neighborhood but it’s clear it will take a few extra steps and time to complete the process. It’s critical that a buyer completely review the covenant agreement before proceeding. The restrictions should be fully understood as they do vary with each housing development.

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