Smart Commute mortgage program begins

Buyers who purchase houses near public transit stops will be able to qualify for more expensive homes using a new program launched Tuesday.

By Kristi Arellano, Denver Post Business Writer

Under mortgage buyer Fannie Mae’s Smart Commute Initiative, lenders will add as much as $250 to the monthly income of joint-borrowers and $200 per month to the income of single borrowers who buy homes within a quarter-mile of a weekday bus stop or within a half-mile of a light-rail stop.

The program is based on the expectation that borrowers will save money by using public transportation. Those savings can then be applied to house payments.

"It’s an extra incentive for people to use public transportation," said Kay Watson, president of the Colorado Association of Realtors.

A recent report by the Surface Transportation Policy Project showed that Americans spend an average of $7,633 on transportation each year.

Participants in the Smart Commute program do not have to prove they are using public transportation, but they do have to certify that they do not own more than two vehicles, said Tony Hernandez, director of Fannie Mae’s Colorado Partnership Office.

Smart Commute mortgages will be available to borrowers in the seven-county metro area who qualify for Fannie Mae mortgages. National City Mortgage in Denver is the first lender in the area to offer the program, but Hernandez expects to bring other lenders on board soon.

Under the program, a couple earning $30,000 a year would be viewed as having an income of $33,000 a year. That would allow them to get a loan as high as $163,000 rather than the $147,000 that they would ordinarily qualify for under Fannie Mae guidelines.

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