AUBURN – Half of all low-income home buyers helped by a city program over the last two years wouldn’t qualify under new guidelines, thanks to higher real estate prices.

The popular Auburn program aimed at helping low-income residents buy homes downtown is upping its minimum income requirement, from $18,000 per year to $25,000.

“Aid has always been limited for people making less than $25,000,” said Gail Phoenix, Auburn community development coordinator. “Now, it’s even more limited.”

Auburn’s program offers low interest loans and forgivable grants for people that buy homes downtown. The city has approved 16 loans for homeowners over the last two years. Eight of them have been for residents making less than $25,000.

Phoenix blamed rising real estate prices downtown.

“When we started this program, the average home price was $113,900,” Phoenix said. Now home sales for the area, stretching from Pettengill Park south to New Auburn, average $155,000.

“We’ve found that people simply cannot qualify – they can’t get financial aid – if they make less than $25,000,” Phoenix said.

Auburn began the program two years ago. It’s funded entirely by a federal Housing and Urban Development grant designed to help low-income people and encourage downtown redevelopment.

Buyers must also purchase a house in one of three Auburn neighborhoods – New Auburn, downtown or the residential area north of Union Street.

Each buyer can qualify for up to 10 different loan or grant programs. That includes a 7 percent standard mortgage through Coastal Enterprises Inc. and three city program loans.

Phoenix said the program is also changing the terms of one of the city program loans. The city used to offer a $40,000 loan for buyers. Half the loan was forgiven if the buyer paid back the other half within 20 years.

Now, buyers have to pay back the entire $40,000, but they have 30 years. They also don’t have to make any payments on the loan for the first 10 years.

“We’ve found that they need that extra time to make things work,” she said.