Community Land Trusts are founded on three basic principles: (1) when the community owns the land, the community controls its own destiny; (2) removing the cost of purchasing land makes homeownership much more affordable; and (3) we need to think in the long-term when it comes to affordable housing issues.

When you buy a home from the Madison Area Community Land Trust, you:

• Purchase the house but not the land.

• Lease the land from the land trust under a 98-year renewable ground lease — which is as close to forever as we can make it.

• Buy your house at a below-market-rate price — and in return, if you ever sell your land trust home, you agree to sell your home to another income-eligible household at a below-market-rate price. The resale formula is:
  Sale price = Initial purchase price + 1% simple interest per year home owned + Qualified Capital Improvements

• Can stay in your home as long as you live — and you can pass it along to your children or other member of your household, so long as they are below the income requirements. Or you can resell and get back the equity you put in, plus some on top.

You should first fill out our MACLT Pre-application (also available in Spanish and Hmong) and send it to housing@maclt.org to begin the process! Pre-applications should be submitted as soon as possible. All other eligibility criteria do not need to be met in any order; however, all must be met before a prospective buyer can close on a CLT home.

To purchase a home from the Madison Area Community Land Trust, you must meet the following criteria.

ELIGIBILITY CRITERIA FOR MACLT HOMEOWNERSHIP:

• Household income must be below 80% county median income (see table below)
• Submit a program pre-application to determine eligibility
• Attend an MACLT orientation with staff
• Be pre-approved for a mortgage at the value of the house available, with necessary down-payment or down-payment assistance
• Attend a homeowner education workshop (completion certificate valid for 18 months)
• For new homes just being developed in the land trust, additional eligibility criteria may apply based on funder requirements.

2023 Maximum household gross (before taxes) income limit (80% Dane County Median): 

The MACLT orientation is where MACLT staff give you a more detailed overview of the Madison Area Community Land Trust and how our homeownership program works, and are available to answer questions so you can understand if our program is a good fit for you.

MACLT ORIENTATION

Sign up for our interest list to hear about the next MACLT orientations. You may also wish to review this CLT Homebuyer Education Module.

MACLT requires that potential home-buyers be pre-approved for a mortgage to be qualified to buy a home.

WHAT IS A PRE-APPROVAL?
A mortgage pre-approval is a process you undertake with your lender looking at your credit history, income, assets, and debts, to determine how much you can afford to pay for a mortgage. If you are seriously considering buying any home, getting a mortgage pre-approval is a good idea to know what kinds of homes you should look for. Keep in mind that a mortgage pre-approval letter is only valid for 90 days, but can be renewed with another meeting if you need to renew it when an MACLT home is available. Because CLT mortgages are a bit different than regular mortgages, you may want to work with one of our partnered lenders for the pre-approval (though not required at this stage).

HOW BIG A LOAN CAN I AFFORD?
Really, the issue is how big a monthly housing payment you can afford. Your monthly housing payment is made up of your mortgage principle and interest, property taxes, insurance, and ground lease fee. Your lender will be looking at how large a monthly housing payment you can afford given your household income and other long-term debts. Mortgage calculators are a great tool for you to use to get a sense of how big a mortgage you can afford before you meet with a lender. Most banks and credit unions have easy-to-use calculators right on their websites. Click here to visit one example of a mortgage calculator.

When a house is available through MACLT, we will notify our interest list to tour the house.  Subscribe to our contact list to receive MACLT emails and newsletters to hear about homes for sale. 

There will be an initial 7-day showing period (which may include an open house). During this period, showings will be conducted with any interested homebuyers. Within one week of the end of the initial showing period, each interested homebuyer must provide MACLT staff with a pre-approval letter from a lender and an MACLT pre-application.

MACLT will use our Applicant Selection Criteria Policy to determine the most qualified buyer based on need. If you are selected for the home, you will be able to move onto the next steps.

Getting a loan: In order to purchase a land trust home, you must qualify for a mortgage loan from a residential lender. There are many different types of mortgages — in our experience, long-term fixed-rate mortgages have worked best for our homebuyers. Most important is working with a loan officer who you trust, who can give you sound advice on the type of mortgage that is best for you.

Choosing a lender: Because CLT mortgages are a bit more complex than regular mortgages, you will need to work with a lender who MACLT has an established relationship with. See the list of partnered lenders.

Down payment: No matter how you slice it, you should expect to come up with some amount of a down payment for the purchase of a land trust home. The minimum required downpayment is in the range 1-3% of the purchase price, depending on the loan program.

Down payment Assistance: Many of our homebuyers qualify for down payment assistance from a variety of sources. Each program has its own qualification requirements and restrictions. Your lender should be able to match you with downpayment assistance options that will work best for you. You may also search the Homebuyers Round Table website to get a sense of the options.

Attendance of a HUD Certified First-time Homebuyer Education Course is required before you finally closing on the home. Homebuyers Round Table offers courses here. For more information on free access to online courses we accept, please contact MACLT staff.

There is a lot of paperwork involved in purchasing a community land trust home. There is the ground lease, which governs the rental of the land to the homeowner. There are loan documents, which explain the financing terms and can be lengthy and difficult to understand. There are closing documents, such as the deed, which gives the buyer title to the house. 

Because of the volume and complexity of these documents, we have always required our homebuyers to retain an attorney prior to closing to review these documents and answer any questions that they might have. MACLT staff can give you a list of lawyers who are familiar with our paperwork and process, but you are welcome to meet with an attorney of your choice.

The closing is where the buyer and seller sign all the papers that ensure that you legally and officially own the house. 

A community land trust closing is similar to other closings in many respects. The main difference is that, in addition to all the loan documents and deeds, a land trust closing involves signing a document called the ground lease. The ground lease is a 30-plus page document which spells out the terms of the lease between you and the land trust.

Links

• Ground Lease (pdf)
• Outline of Ground Lease (pdf)