A new program from the Oklahoma Housing Finance Agency offers zero percent interest, 24-month construction loans to builders of single-family homes, for sale and rent.
The program was initiated by the passing of Oklahoma House Bill 1031, to increase the number of single-family residences available across Oklahoma for individuals and families.
Two other aspects of the program are the offering of gap financing to aid and incentivize the production of rental housing across the state, and removing barriers to homeownership caused by the lack of available funds for down payments and closing costs.
Representatives from OHFA explained the details of the program and the application process Aug. 7 to local builders, elected officials, and finance professionals at the Indian Capital Technology Center.
The no-interest recourse loan would provide 90% of the financing to for-profit and not-for-profit homebuilders committed to constructing homes. Homebuilders must provide 10% of their own money upfront.
The fund, $215 million, divvies the monies up into categories. Developer loans to build rental housing is $63,550,000, consumer down payment and closing costs assistance of $40 million, administrative costs of $10,750,000, and $100,700,000 for no-interest loans to homebuyers of single-family homes.
No multihousing buildings are allowed, only single-family for sale or rental.
“Twenty-five percent of the fund is reserved for urban areas, and 75% for rural,” said Darrell Beavers, housing development director.
Experience requirements of the builder are proportionate to the number of units they are approved to build.
Construction would have to start within nine months of the loan’s award.
If Gov. Kevin Stitt approves the rules of the program, the applications should be available by January 2024.
Marketing will include outreach to potential homebuyers and renters through employers, real estate agents, and community groups.
Builders can sell homes to anyone, but if an homebuyer needs help with a downpayment or closing costs, those funds are available.
“They can sell to anyone, but if an individual needs downpayment or closing costs assistance – if they are buying one of these homes in this program, then they would need to access our assistance program,” said Valenthia Doolin, homeownership director.
The size of homes that qualify for this program are between 1,000 and 2,000 square feet and not to exceed costs of $160 per square foot.
Linda Cheatham, executive director of Tahlequah Area Habitat for Humanity, said the organization can build a home for $120 a square foot, but labor is volunteer.
The general consensus of the attendees was that a home could be built for $160 a square foot.
Doolin asked Mayor Suzanne Myers, who attended the event, what Tahlequah needs the most-single-family or rentals in the next 24 months to help the citizenry.
“The Realtor’s hat says we need single-family housing. The mayor’s hat says we need rentals,” said Myers. “We do need it all, but our biggest gap, in my opinion, is in the $140,000-$200,000 per home. In our single-parent homes, finding homes that are affordable is sometimes challenging.”
The potential impact of this program is approximately 478 homes produced in the first round of funding, with $100,700,000 to be lent to homebuilders in funding rounds in subsequent years.
According to the material handed out to attendees, the cycle will repeat in perpetuity.