Why CLTs Matter: Permanent Affordability

The CLT Cycle

CLTs create a permanently affordable home by retaining ownership of the land and selling the building only to an income-qualified buyer. This lowers the cost of the home to the buyer, resulting in a smaller down payment and lower monthly mortgage expenses.

The CLT model allows households to build wealth through their monthly mortgage payments. In exchange for buying the house at a lower price, a CLT homeowner agrees to pass on the gift by selling the home at a resale price affordable to someone in a similar financial situation.

The resale formula, included in the Ground Lease, sets the resale price of the home and ensures the home remains affordable in perpetuity for all subsequent buyers. At resale, the homeowner walks away with cash equity from their down payment, earned equity from their monthly mortgage payments, and the home’s increase in value as defined by the resale formula.

The Ground Lease is an extremely important legal agreement between the homeowner and VSCLT that governs their relationship, outlines the rights and responsibilities of homeowners, and leases the land to the homeowner.

VSCLT is there to support homeowners at every step along the CLT journey and maintains relationships with lenders, localities, and other stakeholders to ensure the success of homeowners and the CLT model.