In providing affordable housing, issuers are continuing to look at new ways to provide and combine benefits to homebuyers despite the decline in the availability of traditional resources. Combining resources creatively is only necessary when issuers believe that their mission is not necessarily to provide mortgages at the lowest possible rate, but instead to apply various forms of subsidy in ways that help people overcome specific obstacles to purchase a home. Our premium bond down payment assistance program was our first step in recognizing this need. However, as we examined how to best serve homebuyers while stretching scarce resources as much as possible, we realized that there were differing needs (both in terms of rate subsidy and down payment assistance). We determined that it is not in the best interest of mortgagors to structure all programs so that every home buyer receives down payment assistance funded from the same sources and in the same amounts, or by providing every home buyer with the same mortgage rates.

Our Targeted Subsidy Programs address the reality that different people have different needs regarding the amounts and types of financial assistance when purchasing a home. First, these programs recognize that the subsidy provided by tax-exempt bonds is not the only subsidy that an issuer can use; several resources are available to fund mortgages and down payment assistance. Second, our Targeted Subsidy Programs find new resources and subsidies to add to the mix. As a result, we can design programs offering multiple mortgages and different amounts of down payment assistance to more closely tailor the program to a homebuyer’s exact needs. In several of our programs, different mortgage options are available to people of different income levels. Income levels and geographic distinctions can determine the mortgage rate and the amount of down payment assistance a borrower receives.

While we now have the ability to structure a program offering multiple mortgage rates and differing amounts of down payment assistance, it is important to evaluate the desirability of these features. Obviously, the more options a program offers, the more complicated it is to administer. We have found that in each issuer’s particular situation, it is important to carefully examine and discover a workable balance between program complexity and program administration.