[Code of Federal Regulations]
[Title 24, Volume 3]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR572.120]

[Page 177-178]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
  CHAPTER V--OFFICE OF ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND 
        DEVELOPMENT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 572_HOPE FOR HOMEOWNERSHIP OF SINGLE FAMILY HOMES PROGRAM (HOPE 3)--Table of Contents
 
   Subpart B_Homeownership Program Requirements_Implementation Grants
 
Sec. 572.120  Affordability standards.

    (a) Initial affordability. (1) The monthly expenditure for 
principal, interest, taxes, and insurance by an eligible family that is 
required under the financing both for the acquisition and

[[Page 178]]

for the rehabilitation in accordance with Sec. 572.100(d) of a unit 
(whether the required rehabilitation occurs before or after the family 
takes title) must be not less than 20 percent and not more than 30 
percent of one-twelfth of the annual income of the family used for the 
purpose of determining eligibility under Sec. 572.110(a). (For the 
purpose of determining affordability of the family, the recipient may, 
at its option, adjust downward the annual incomes of eligible families 
using reasonable standards and procedures consistently applied.) HUD may 
approve a justified request for a floor lower than 20 percent to avoid 
undue hardship to families, such as where the cost of utilities is high.
    (2) The 30 percent cap on monthly payments includes closing costs 
only if closing costs are included in the costs of principal and 
interest, or are otherwise required to be paid by the homeowner over 
time after acquisition.
    (3) Applicants are encouraged to consider the additional monthly 
costs of utilities and other monthly housing costs, such as condominium 
and cooperative fees, in determining whether the family can afford to 
purchase a unit.
    (b) Continued affordability. The recipient must develop a plan 
demonstrating reasonable efforts to ensure continued affordability by 
homeowners in the eligible property. Financing that would impair the 
continued affordability of the property for homebuyers, such as a 
mortgage that is not fully amortizing (e.g., a ``balloon'' mortgage) may 
not be used. The plan should take into account such program features as 
long-term financing at reasonable terms, energy conservation, and 
improvements that will entail low-cost maintenance.

[58 FR 36526, July 7, 1993, as amended at 60 FR 36018, July 12, 1995]