When purchasing a house, first-time home buyers tend to think about the cash needed to cover things like closing costs and the foreboding down payment. We collaborate with the sponsor of this program, the California Housing Finance Agency (CalHFA), to provide down payment assistance programs for the right buyers who may qualify.
What do these programs consist of?
These programs help homebuyers in California purchase property by providing down payment and/or closing cost assistance in the form of a second mortgage lien. The programs are limited to owner occupied primary residences only. Depending on individual credit history and financial health, borrowers can qualify for one of two options:
Option 1: The 3% Down Payment Assistance program (Conventional financing)
Option 2: The 3.5% Down Payment Assistance program (FHA financing)
Basic Compositions of Both Options:
- A 640 minimum FICO score is needed
- Down payment assistance acts as a second lien on the property – this functions as a loan, which will be recaptured once the property is refinanced or sold in the future
- Interest rate for this second lien is calculated at an interest rate of 1.00%
- No mortgage payments are made for this second lien
- The debt-to-income (DTI) ratio cutoff is 48.99%
- Single family residences (SFR), Planned Unit Developments (PUDs), condos, and manufactured homes are acceptable
- Please contact us if you are looking at a condo so we can confirm if it is an approved project
Types of Borrowers that are Eligible:
- Must be a first-time homebuyer – this is defined as not having an ownership interest in a property in the last three years
- The home must be used as a primary residence
- All borrowers on loan must occupy the property
- Income limits apply and vary by county
Among specific documents needed to apply for these programs, a HUD homebuyer education class needs to be completed by the homebuyer prior to the close of escrow.
Keep in mind that every county in California may offer slightly different renditions of down payment assistance or first-time home buyer programs. For more information on these programs and what you may qualify for, give us a call at (760) 930-0569 and one of our loan officers will assist you.