Too Good To Be True. Oregon Is Giving 0% Home Loans. Other States, Towns And Cities Are Offering Big Incentives For Homebuyers, Too

If it sounds too good to be true, it probably is. However, in Oregon, 0% loans are a reality. The governor's office recently announced that the state is issuing loans without interest for developers to build middle-income housing. The incentive, designed to kick-start construction, will have a knock-on effect on homebuyers.

The Moderate Income Revolving Loan

“The Moderate Income Revolving Loan aims to empower cities and counties by providing loans to local governments, which can support developers to ensure housing prices are within reach to individuals and families who struggle to secure enough traditional credit or financing,” Gov. Tina Kotek said in a statement.

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State lawmakers have approved  $75 million for MIRL  — a key component of Kotek’s housing package, which passed the 2024 legislative session.

“When Oregonians making a good wage can’t afford to live where they work, our businesses and communities can’t thrive. We have to work to make sure all Oregon families can afford a home with the urgency they deserve,” Kotek continued.

Oregon Is One Of The Most Expensive States To Buy A Home

According to Redfin, Oregon is one of the most expensive states to buy a home, with a median sales price of $508,000. High prices have slowed down homebuilding, which has a shortfall of 29,500 new homes per year, according to Carl Riccadona, the state’s chief economist. “When we look at this nationally, housing affordability is as poor as it has been going all the way back to the 1980s when we had double-digit mortgage rates,” he said. 

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“We need everything,” Tillamook County Commissioner Erin Skaar told Oregon Public Broadcasting. “We have a huge need for affordable housing. We have a huge need for workforce housing. The hospitality industry is employing so many, and some of those folks make a little too much to be in affordable housing, but couldn’t afford market rate.”

The Details

According to the governor's press release, under her program, housing must be rented or sold to families making lower than 120% of the area median income during the loan’s lifespan, typically 10 years. The fund is repaid with a predetermined annual program fee instead of property taxes. The homeowner is not responsible for it, allowing the state to lend out the money repeatedly.

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How Home Buyers Are Getting Incentivized Elsewhere

Oregon joins other states offering similar homebuilding incentives. In New York, Gov. Kathy Hochul proposed a revolving loan fund to increase mixed-income rental development outside New York City in her State of the State address in January. 

Pawnee, Nebraska is offering $50,000 in downpayment assistance to homebuyers who purchase newly constructed homes. The initiative is designed to revitalize the historic town, which has seen its population drop from 1,300 to just 850. The city's Vision 2030 plan focuses on making housing affordable and building 25 new single-family homes on city-owned lots. The downpayment assistance is based on applicants earning 120% of the area median income for Pawnee County. The initiative is supported by a $650,000 Nebraska Affordable Housing Trust grant.

“We want to build this as a blueprint for other small towns,” Steve Glenn, chair of the Economic Development Council for the Pawnee City Chamber of Commerce, told the Des Moines Register. “Once we have a blueprint, we want to share it with as many small towns as we can.”

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