New program for affordable housing in the US Virgin Islands

The struggle for homeownership has increased exponentially in the last few years. In the United States Virgin Islands, the homeownership rate was 47.8% in 2020. As a comparison, home ownership in the United States is 66%. 

Fortunately, since October 2022, the VI Slice Moderate Income Homeownership Program, administered by the US Virgin Islands Economic Development Authority (VIEDA) in partnership with the Office of the Governor and the Office of Disaster Recovery (ODR), was created to help first-time homeowners with accessing financial assistance to purchase, renovate or build a home. Funding comes from the American Rescue Plan Act, signed on March 11, 2021, to provide economic relief during the COVID-19 pandemic. 

This new program provides tax incentives to encourage business investment and enterprise loans in what were previously vibrant communities that have become blighted and helped rebuild them. Among the primary goals for VIEDA is to assist residents in obtaining home residence. 

The programs are designed for moderate incomes, which look different depending on the islands. 

There are fundamental gaps that exist between what a lender can get from the bank in order to purchase a house. VIEDA has set up a gap financing-supplemental fill starting at 35 thousand dollars.  

The program has generated significant interest, with over 200 inquiries since its beginning, including daily inquiries from the public. In order to meet the requirements and be eligible for the program, one must complete an access home buyer course. Depending on how much one qualifies for financing will determine how much one will receive in funding, as VI Slice cannot supersede the mortgage requirements of the bank. 

The primary goal of the “VI Slice” Homeownership Program is to establish opportunities that may increase homeownership rates amongst moderate-income households in the US Virgin Islands. The program will support long-term sustainability, resiliency, and economic viability across the territory by providing financial assistance to expand affordable homeownership opportunities. Three distinct programs will be offered by VI Slice: Home Purchase with Rehabilitation, New Home Construction, and Down Payment & Closing Costs Assistance. 

The median household income in the US Virgin Islands in 2019 was $40,408, according to the census bureau. The percentage of families in poverty in the US Virgin Islands showed a slight increase from 18.3% in 2009 to 18.6% in 2019. The Home Purchase Rehabilitation option will provide funding to clients for the purchase and/or rehabilitation of single-family or multi-family properties, limited to three dwellings on the home site. 

Home Purchase with Rehabilitation

The first of the programs offered by VI Slice is the Home Purchase and Rehabilitation combo, in which applicable repairs include home upgrades and improvements necessary for addressing health and safety issues. Additionally, building code violations require repairs relative to plumbing, electrical, and structural deficiencies. If the borrower sells the property or fails to maintain the resident requirement, a recapture of the second mortgage may be enforced. The funding limit is $200,000.

New Home Construction Combo Loan 

The second program is the New Home Construction Combo Loan which will provide funding to clients for the cost of raw land for the home site. This may include building materials and construction costs for a single-family or multi-family residence limited to two dwellings on the home site. The property must be the client’s primary residence for a minimum of ten years.  Additionally, a “soft” second lien will be attached to the subject property title by the US Virgin Islands Government for a minimum period also of 10 years. 

Down Payment & Closing Cost Assistance 

The final service offered by VI Slice is the Down Payment & Closing Cost Assistance. The 20% Down Payment Assistance product will provide funding to clients for the required down payment deposit to secure a loan product in the form of a grant or a no- interest, second mortgage loan that will convert to a grant after the borrower lives in the subject property for a minimum period of ten (10) years. Program funds can be utilized for the full or partial amount needed for the required down payment and/or closing costs, providing that the combined amount does not exceed the program’s maximum funding limit. Maximum Combined Loan-to-Value (CLTV) is not to exceed 95%. Its funding limit is of $100,000.00.

VI Slice is funded through a $20 Million grant through the American Rescue Plan Act and administered by the VI Economic Development Authority. There are also strong partnerships between the Office of the Governor and the Office of Disaster Recovery. The program was launched in October of last year and will continue until funds are exhausted. 

First-time homebuyer

If one is a first-time homebuyer, one must complete the Education Certificate of Completion. Additionally, to qualify for the services, one must be a resident of the USVI for the last three years, a prior resident for at least ten years, or have been born in the USVI. Finally, one must be able to make a minimum earnest deposit of $5,000. 

Financing Requirements 

In terms of financing requirements, there must be a commitment letter from the primary lender for at least 60% of the overall project cost. The combined mortgage payments cannot exceed 31% of the client’s gross monthly household income, and debt cannot exceed 43% of gross monthly household income. 

VIEDA has implemented this new program in hopes of bringing more accessible and affordable housing to the US Virgin Islands. It is a positive step forward in the long road to fair and equitable housing for all.