Two new home loans using the V.I. Slice Moderate-Income Homeownership Program closed at the end of 2023, officials announced Tuesday. They are the first V.I. Slice loans with First Bank Puerto Rico, which joins Capital Mortgage Services of Texas and the U.S. Department of Agriculture Rural Development as the third lender to successfully close a loan in the program.
Also Tuesday, the Economic Development Authority announced Banco Popular intended to participate in the V.I. Slice program, signing a memorandum of agreement making it the sixth lender officially interested in participating. Banco Popular joins First Bank, Capital Mortgage, the Department of Agriculture-Rural Development, Merchants Commercial Bank, and Oriental Bank.
V.I. Slice draws on $20 million dollars set up for the program through the federal American Rescue Plan Act. The program ends Dec. 31, 2026, or once that money runs out, said Celina Morris, director of marketing for the Virgin Islands Economic Development Authority.
Launched by Gov. Albert Bryan Jr. in October 2022, V.I. Slice provides up to $200,000 in gap financing to Virgin Islanders who qualify for a conventional mortgage through participating banks and meet the other program requirements. Income requirements depend on the value of the property and what island the applicant lives on, and the borrower needs to be a first-time homeowner with no other real estate holdings.
The first V.I. Slice loan closed in May 2023. To date, the two First Bank loans — one on St. Thomas and one on St. Croix — join six V.I. Slice loans with Capital Mortgage Services of Texas and one with U.S. Department of Agriculture-Rural Development. Three other potential loans are pending decision, she said.
In total, there have been two successful loans in the program on St. Thomas and seven in St. Croix. Loans on St. Croix generally have a lower threshold than St. Thomas or St. John as there is more property available there and prices are lower, Morris said.
In August, first-time homeowners on St. Croix needed a household income between $43,501 and $216,300 to qualify. For St. John, the income range is $47,151 to $260,750. And St. Thomas borrowers must make between $45,298 and $242,900 to qualify.
In September, the EDA made adjustments to the program. The maximum combined loan-to-value ratio was increased from 95 percent to 105 percent. This ratio is determined by dividing what is owed on a property — its mortgage — by its market worth. A $500,000 property with $400,000 owed means 80 percent of the property is at risk should the borrower default.
A 105 percent combined loan-to-value ratio means more is owed on the property than what it is worth, commonly called being underwater.
The debt-to-income ratio increased from 31 percent to 36 percent. This means borrowers could qualify for the V.I. Slice program if they need to dedicate 36 percent or less of their pre-tax monthly income to reoccurring bills, like a mortgage, credit card bills, and other loans.
