Friday, 30 October 2020

California First-Time Homebuyer Programs

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Buying a home for the first time in California? Be prepared for some serious sticker shock. California is one of the most expensive places in the country to purchase property. Fortunately, however, there’s help.The California Housing Finance Agency (CalHFA) offers assistance programs for first-time homebuyers with low to moderate incomes. If you haven’t owned a home for three years, you’re considered a first-time homebuyer. We’ll go over everything you need to know.

California first-time homebuyer programs

CalHFA offers a variety of programs for first-time buyers. Two of these are conventional loans with fixed interest rates: the CalHFA Conventional program and the CalPLUS Conventional program. They’re 30-year fixed-rate mortgages offered through private lenders on the conventional market.

CalPLUS Conventional loan interest rates are slightly higher, but the mortgages can be combined with the MyHome Assistance program (to help with the down payment) and the CalHFA Zero Interest Program (to help with closing costs).

CalHFA also has programs for energy-efficient homes, for teachers and for veterans.

Eligibility for California assistance

To qualify for any of these programs, you need to have have a low to moderate income (find out if you qualify by using the CalHFA eligibility questionnaire), though a CalHFA-approved lender will be the person who actually approves you for the loan.

Income limits are different for each program and for each location within California, so see below for the details for the program you’re interested in specifically. For example, the 2019 income limit for CalHFA loans in Santa Barbara is $152,600, while the limit for the same mortgage in Los Angeles is $128,300.

You’ll also want to check the property eligibility requirements for the home you’re considering buying. Among those requirements, the home must be a single-family dwelling that will be your primary residence, and it’s subject to price limits

CalHFA Conventional Program

Features

  • Thirty-year fixed rate mortgage
  • Conventional loan via Fannie Mae
  • Can be combined with the MyHome Assistance Program or the School Teacher and Employee Assistance Program.
  • Mortgage insurance is required for all loans whose loan-to-value ratios (LTV) are 80% or higher. Your LTV is your loan amount divided by the property value.
  • Before receiving this loan, you must attend a homebuying education course.

Eligibility

  • Available for first-time and repeat homebuyers
  • You must move into the home within 60 days of closing
  • Price of the home can’t exceed the CalHFA’s sales price limit of $765,000
  • Property must be a single-family, one-unit residence.
  • You must have a minimum credit score of 660.
  • If your loan exceeds $484,350 or $726,525 (if it’s a high balance loan), it’ll be subject to an additional fee.
  • LTV can’t exceed 97%.

How it works

First, take the approved homebuyer education course online or in-person via an HUD-approved counseling agency or Neighborworks America. Since CalHFA doesn’t accept direct loan applications, you’ll next have to speak with a CalHFA loan officer, who can guide you through the application and buying process.

Learn more

CalPLUS Conventional program

Features

  • Thirty-year fixed-rate mortgage that’s combined with the CalHFA Zero Interest Program (ZIP) for closing costs.
  • Interest rates vary depending on your finances and your lender.
  • When ZIP is added to the CalPLUS loan, it offers a deferred-payment second mortgage with a tiered interest rate of 3% or 4% of the first mortgage amount.
  • Interest rate is slightly higher than the CalHFA Conventional Loan (here are current rates).

Eligibility

  • The home must be your primary residence.
  • Sales price can’t exceed the California sales price limit of $765,000.
  • Property must be a single-family, one-unit residence.
  • You must complete a homebuyer education course and obtain a certificate of completion.
  • You must meet income limits, which vary by region.

How it works

You’ll need to take the approved homebuyer education course online or in-person via an HUD-approved counseling agency or Neighborworks America. Once you receive a certificate of completion, contact a CalHFA loan officer who has been approved and trained by the CalHFA. They’ll walk you through the application and homebuying processes.

Learn more

MyHome Assistance Program

This program is a loan for your down payment and closing costs.

Features

  • Loan limit is 3.5% of the home price or appraised value, whichever is lower.
  • Must be used to contribute to the down payment or for closing costs.
  • Can be combined with other CalHFA loans.

Eligibility

  • You must be a first-time homebuyer.
  • The property must be your primary residence.
  • Home must be a single-family, one-unit residence and can be manufactured housing.
  • The sales price can’t exceed the California sales price limit of $765,000.
  • You must complete a homebuyer education course and obtain a certificate of completion.
  • You must meet income limits, which vary depending on your region.

How it works

Start by taking the homebuyer education course online or in-person via a HUD-approved counseling agency or Neighborworks America. Next, you’ll have to apply for the loan via a private loan officer who has been trained by CalHFA.

Learn more

CalHFA Zero Interest Program

The CalHFA Zero Interest Program (ZIP) is another loan you must use toward a down payment or closing costs.

Features

  • Must be used in conjunction with the CalPlus mortgage program.
  • Helps pay for down payment or closing costs.
  • Zero-percent interest rate
  • Maximum loan amounts are based on daily rate sheet pricing.
  • Payments are deferred for the life of the mortgage.
  • Repayment of the principal is due at the earliest event: title transfer, sale of the property, payoff, refinance or a formal filing and recording of a notice of default.
  • High balance loans that exceed $484,350 are subject to an additional fee.
  • Interest rates are tiered. When paired with a CalPLUS Conventional loan, interest will be 3% or 4% of the first mortgage amount.
  • When combined with the CalPLUS FHA loan, interest rate will be 3.5% or 4.5% of the first loan amount.

Eligibility

  • You must be a first-time homebuyer unless you’ve been affected by a California natural disaster.
  • Maximum debt-to-income ratio (DTI) of 45% for automated underwriting or 43% for manual underwriting.
  • Credit score must be 640, or 660 for a manually underwritten loan. Credit score for manufactured housing is 660. If you don’t have a credit score, you’re only eligible if another occupant has a credit score that meets the minimum requirements.

How it works

A CalHFA preferred loan officer will get you prequalified.

Learn more

Cal-EEM + Grant program

The Cal-EEM + Grant program combines an FHA-insured Energy Efficient Mortgage with a Cal-EEM Grant to fund energy-efficient improvements to the home.

Features

  • Helps you save money on utility bills by financing energy-efficient improvements with your FHA-insured mortgage.
  • The maximum amount of the energy package that may be added to your loan amount is the lowest of the following four options:
    • Cost effective improvements to be made based on the home energy assessment;
    • Or less than 5% of the adjusted value;
    • Or 115% of the median area price of a single-family home;
    • Or 150% of the national conforming mortgage limit.

Eligibility

  • Sales price can’t exceed the California sales price limit of $765,000.
  • Home must be a single-family, one-unit residence and can be manufactured housing.
  • Condos are allowed, but must meet guidelines.
  • Home is subject to a Home Energy Rating System report.
  • Home must follow FHA EEM guidelines.
  • Property must be your primary residence.
  • You have to complete a homebuyer education course and obtain a certificate of completion.
  • You have to meet CalHFA income limits, which vary based on your location.

How it works

You’ll need to take the homebuyer education course online or in-person via an HUD-approved counseling agency or Neighborworks America. Next, you’ll apply for the loans via a private loan officer who has been trained by CalHFA.

Learn more

School Teacher and Employee Assistance Program

This program is available to teachers, administrators, school district employees and staff at California public schools.

Features

  • Up to 4% of the purchase price or appraised value
  • Use for down payment or closing costs
  • Deferred payments
  • Can be combined with a CalPLUS mortgage loan

Eligibility

  • Must be a first-time homebuyer employed at a K-12 California school or school district office.
  • The property must be your primary residence.
  • Sales price can’t exceed the California sales price limit of $765,000.
  • You must complete a homebuyer education course and obtain a certificate of completion.
  • You must meet CalHFA income limits.

How it works

Once you’ve taken the homebuyer education course online or in-person via an HUD-approved counseling agency or Neighborworks America, apply for the loan program via a CalHFA approved lender.

Learn more

CalHFA VA Loan Program

Features

  • VA-insured loan
  • Thirty-year fixed-rate mortgage for first-time homebuyers who are eligible veterans, servicemembers and surviving spouses.
  • Interest rates vary depending on your finances and on your lender.

Eligibility

  • You must have a valid certificate of VA eligibility.
  • Sales price can’t exceed the California sales price limit of $765,000.
  • Property must be a single-family, one-unit residence and does not include manufactured housing.
  • The home must be your primary residence.
  • You must complete a homebuyer education course and receive a certificate of completion.

How it works

After completing the homebuyer education course online or in-person via an HUD-approved counseling agency or Neighborworks America, you need to apply for a loan via a private CHFA approved loan officer. You will need to provide pay stubs, bank statements, employment history and previous tax returns.

Learn more

National first-time homebuyer programs

The options detailed above are all provided by the state of California, but there are other homebuyer programs you can take advantage of geared toward first-time homebuyers throughout the nation. These can be found in LendingTree’s national first-time homebuying guide. (LendingTree owns MagnifyMoney.)

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Danielle Braff

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Source: https://www.magnifymoney.com/blog/mortgage/california-first-time-homebuyer-programs/

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