The La Plata Homes Fund Inc., a nonprofit organization that helps local residents buy homes, has received a $600,000 grant from the U.S. Treasury's Community Development Financial Institution Fund.

Nationwide, the federal fund awarded a total of $104.8 million to 179 local agencies serving struggling communities.

A portion of the grant, $100,000, will help the nonprofit develop its long-term business plan. The remaining $500,000 will be distributed in loans to help low- and middle-income La Plata County residents purchase homes.

Eligible borrowers must make 125 percent or less of the area's median income, which, according to a Sept. 16 Regional Housing Alliance news release, is $57,900 for an individual or $82,800 for a family of four.

Julie Levy, programs manager for both the RHA and the La Plata Homes Fund, said this year the fund hopes to assist 30 to 40 people and families with loans.

In lieu of interest, borrowers pay back the principle amount of the loan plus a share of any appreciation in the value of the house when it is sold or refinanced. By accounting for inflation in home prices, the organization's funds remain in sync with housing market fluctuations.

"It's a very market-based, market-driven program," Levy said Sunday. "If the market stays flat, they won't owe anything. If the market skyrockets, appreciation will grow."

As loans are repaid, she said, the funds are put right back into the program to assist other homebuyers.

But before a loan is issued, the organization works with the borrower to provide counseling and education about homeowner responsibilities, money management and home maintenance. The borrower also must have a plan to both obtain financing and repay the loan.

"It's about responsible homeownership," Levy said. "Sometimes it takes three months and sometimes it takes two years to save up for a down payment and get their credit rating up."

The emphasis on education has paid off. Levy said that compared with a national default rate of 18 to 20 percent, only 3 percent of homeowners enrolled in similar programs nationwide default on their loans.

pyoung@durangoherald.com