We recently learned that the City of Durham has launched a pilot program to increase affordable housing in the city. The pilot will use $1.75 million from the Forever Home, Durham program to fund loans to residents interested in building an ADU. The homeowner will be eligible for a loan of up to $80,000 with a 2% fixed interest rate for 30 years.
The intent is to add more housing options without displacing current residents and to permit current homeowners to generate rental income. To qualify, the homeowner must commit to renting to tenants who make 80% of the Area Median Income (AMI) or below.
It is expected the pilot will be able to supply loans for approximately 20 ADU’s in Durham. All the details are available from City of Durham program website, but we have copied some of the details here.
To qualify, applicants must:
- Own and occupy a property within Durham city limits
- Maintain a minimum credit score of 580
- Be current on property taxes and mortgage obligations
- Have a permit-ready site
- Agree to execute a 30-year recorded affordability covenant
- Additional underwriting criteria apply. Please refer to the program manual for complete requirements.
The property must:
- Be zoned to permit ADU construction under Durham’s Unified Development Ordinance
- Have adequate lot size and setbacks
- Have access to public water and sewer
- Have no unresolved code violations
- Maintain clear title and active homeowner’s insurance
An applicant has the choice of using Coram Houses LLC , which the City of Durham is working with on the project, or use a licensed contractor that meets the program requirements.
About Coram Houses
Founded in 2021 by Topher Thomas, a Durham County Teacher, Coram Houses is a business that specifically builds tiny houses in homeowners back yards to rent. The primary intent is to provide affordable homes in the city. The smallest tiny home Topher has built is 120 square feet. However the homes they are featuring now are larger, you can see several examples here.
We at the blog blog think this is an interesting and neat idea. No single solution will comprehensively solve affordability issues. However, this is one that promises benefits to the tenants as well as the landlord, as rental income from the home can help a homeowner stay where they are.
Chapel Hill Town Councilor, Theodore Nollert has this comment on the program:
It’s great to see Durham experimenting with a way to encourage smaller homes. The initial rental requirement is creative and may work out well – but let’s not forget that starter home prices are now out of reach, and getting ADUs will help unlock more starter home prices down the line!
As Chapel Hill moves forward on the LUMO (Land Use Management Ordinance), we look forward to some creative ideas and progressive approaches to provide more housing in town.
A 616 sqft, one bedroom design with loft spaces and a downstairs living area. Coram states it was inspired by local Durham activist Pauli Murray