The Cambridge Affordable Housing Trust has narrowed eligibility for HomeBridge, its main program to help the middle-class afford homes in Cambridge. The popular program subsidizes market rate home purchases for individuals and families in Cambridge earning from 60 percent to 120 percent of the median family income or $99,240 to $193,080 for a family of four.
The agency also moved an additional $10 million into a part of the program that helps finance purchases by households earning 60 percent to 100 percent of median income. Money available through that piece of the program had dwindled to $1.1 million, a staff memo said.
The shifts were approved March 26, less than two weeks after the trust held a press conference touting its creation or preservation of more than 900 affordable homes from 2020 to 2025.
HomeBridge will now:
- Restrict eligibility to Cambridge residents. The program since 2015 had allowed non-residents who worked in the city to apply.
- Require recipients to make mortgage payments of 30 percent of income instead of giving them the option to pay 25 percent.
- Stop unlimited two-month extensions of loans for approved applicants who don’t purchase within four months; now they will get one four-month extension and then must wait a year to reapply.
- Set a financial resource floor for applicants. Approved participants with lower-income or lower-asset levels were unable to buy a home in the current market, frustrating them and stressing HomeBridge finances.
The program is for first-time homebuyers.
The changes aren’t aimed at saving money, city housing director Chris Cotter said in an interview. Instead, he said, the new rules are meant to more closely “target” households that need help and can take advantage of the program. Still, a staff memo to trust members said that without the changes, the agency would probably need to add funds to the program every 18 months. The most recent infusion, also for $10 million, was in November 2024, 14 months ago.
“The trust would like to have commitments like this less often,” Cotter said. He rejected any implication that the trust, which funnels city money to affordable housing, was running short. The trust’s latest financial report in January said it had $48.5 million in uncommitted funds and almost $57 million in funding requests under review. Much of those requests will not be filled until fiscal 2027. “We also know that the city budget is going to be submitted. There will be another big commitment. There will be more revenue there,” Cotter said.
In recent years, the city has given more than $40 million a year to the trust, much of it from a 3 percent property tax surcharge that many residents don’t have to pay because of an exemption for those who live in their homes. That surcharge is matched by the state. Cotter expressed confidence the city will continue to contribute similar amounts, and at the press conference city manager Yi-An Huang reaffirmed a commitment to doing so.
Demand for program is up
The HomeBridge program has created 121 affordable homes since the early 2000s. It helps applicants earning from 60 percent to 120 percent of the median family income in Cambridge, or $99,240 to $193,080 for a family of four. Nationally, median household income for a family of four was about $124,000 in 2024.
The program pays a percentage of the market price for a unit depending on its size: up to 50 percent for a one-bedroom unit, 60 percent for two-bedrooms, and 65 percent for three-bedroom units. The total price must be below a maximum set by the trust for each size and is modified periodically. Each approved subsidy is calculated individually based on the applicant’s income and savings.
The program’s expenses have steadily increased because of a series of changes in the housing market and from the Trust itself. Last year, it was involved in the purchase of a record 16 homes.
In 2020, the program began serving households earning from 100 to 120 percent of median income – the middle-income segment. And in 2023 the trust increased subsidy rates and raised the maximum purchase price for three-bedroom units to $1.1 million. Demand has increased, leading to the record number of 16 homes purchased last year.
The success of the program has created problems such as families approved for HomeBridge bidding against each other for properties. “This is increasing overall costs and we have seen anecdotal evidence that HomeBridge could be driving the market, rather than responding to the market, for certain types of units, resulting in higher costs for buyers and the program,” the memo said.
Examples of the costs: in the past two years, the average price of units purchased by HomeBridge subsidy recipients was $619,500 for a one-bedroom home; $824,250 for two bedrooms and $1.1 million for three bedrooms. More families with subsidies are buying three bedroom homes. Since the 2023 increase in the allowed purchase price for three-bedroom units, there have been 15 such homes purchased through HomeBridge, and all have exceeded $1 million.
For most of the decade after the trust allowed non-residents to apply, only 10 percent of applications came from people who work here but don’t live here; last year the non-resident portion rose to 25 percent of applications. And HomeBridge is now contributing an average $500,000 to home purchases, after increasing the percentage subsidies in 2023.
HomeBridge recipients must agree to make their property permanently affordable, meaning that if they sell they can’t fully benefit from a rise in market value. Still, because of the increasing home prices in the program, the trust fears that it will have to spend more after a HomeBridge owner sells, to subsidize the unit again to make it affordable to a lower-income household.
Home resale pool also needed funds
A related program is also facing financial stresses. Called the Homeownership Resale Pool, that program is aimed at those earning from 50% to 100% of median income ($80,450 to $160,900 for a family of four) and offers homes at low prices when a previous owner of an affordable unit sells. That includes resales of units subsidized by HomeBridge.
The trust added $3 million to funds for the pool at the March 26 meeting. “Several factors are creating both short-term cash flow challenges and increasing the rate that the (Resale Pool Fund) sinks, permanently reducing the Fund balance,” according to a staff memo. Those factors include a 2024 change in the resale formula that increased the maximum price owners could sell their units for. “As we have previously discussed, the change to the resale formula has increased repurchase prices for units now being sold by current homeowners. This is particularly pronounced with HomeBridge units which typically have a higher initial affordable value,” the staff memo said.
Another source of added expense is the need to rehabilitate some homes before reselling them. The memo noted that some units have been owned for decades “and have significant deferred maintenance or were purchased by homebuyers without rehab being completed before purchase.”
Net subsidy for resales averaged $15,000 from 2006 to 2024, and jumped to $28,000 after then. The subsidy for the most recent 10 units averaged more than $100,000. However, the Trust considers the expense worth paying because many of these homes had very little public subsidy to begin with so it’s a relatively inexpensive way to preserve affordable homes, the memo said.
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