Home buyers in California have access to a variety of support programs to help with everything from education to financing. The problem is many first-time buyers don’t know about these programs. So we have launched an educational campaign to promote some of the California home buyer programs that will be available in 2014.
California Homebuyer’s Downpayment Assistance Program (CHDAP)
The California Housing Finance Agency (CalHFA) manages a program that offers down-payment assistance to some California home buyers. Here is an overview of the current guidelines and eligibility criteria, which should carry over into 2014.
Through the CHDAP program, first-time home buyers in California can obtain a “deferred-payment” junior loan for an amount up to 3% of the purchase price or the appraised property value (whichever is less). Buyers can use these funds to cover some or all of their down payment and/or closing costs. This down-payment assistance program can be used in conjunction with other California Housing Finance Agency offerings, such as the CalHFA first mortgage loan.
CalHFA has specific eligibility requirements for borrowers, as well as for the property being purchased.
- This home buying program is limited to first-time buyers in California.
- The property being purchased must serve as a primary residence (as opposed to a vacation or investment home).
- California home buyers must complete an approved educational / counseling program.
- The borrower’s income must be below specific limits set forth by CalHFA. These limits vary depending on the type of loan being used (e.g., FHA versus conventional mortgages). Income limits also vary by county. For a complete list of these limits in PDF format, please visit www.calhfa.ca.gov.
- Last, but certainly not least, the borrower must meet the requirements of (A) the mortgage lender that is providing the loan, and (B) the mortgage insurance company that is insuring the loan. Among other things, borrowers must have acceptable credit scores and debt-to-income ratios, as determined by the particular lender being used.
In addition to the eligibility requirements for borrowers, the CHDAP California first-time buyer program has specific requirements for the property being purchased.
The home’s purchase price must not exceed pre-established limits. These limits are county-specific and can be found on the CalHFA website. The property must be a single-family home or an approved condo unit. Land-trust purchases and manufactured (modular and mobile) homes are not permitted under this program.
Borrowers must apply for this California home buying program through an approved lender. For a list of such lenders, visit www.calhfa.ca.gov and click on the link for home buyer programs.
CalVet: Home Loans for California Veterans & Active Duty Military
California is a big military state, with dozens of bases and installations spanning all branches of the U.S. military. So it’s good to know there are California home buying programs that cater to both veterans and active-duty military members.
The CalVet Home Loan program is offered by the California Department of Veterans Affairs. According to the Department, they have broadened the eligibility criteria for these loans so that “nearly any veteran wanting to buy a home in California is eligible.” Members currently serving in the military are also eligible. The program’s features and benefits include competitive interest rates and low (or even no) down payment.
Eligibility: This home buying program is open to all California veterans who have served a minimum of 90 days on active duty, under honorable conditions. The DD-214 form must be provided as verification of service. Military members who are currently serving on active duty may be eligible once they clear the 90-day requirement. For more information on this unique program for home buyers, visit the CalVet Home Loans website: www.calvet.ca.gov/homeloans/
Home Buying Programs at the City and County Level
In addition to CalHFA’s statewide program mentioned above, there are numerous programs that exist at the city or county level. Many of these are funded by the Department of Housing and Urban Development (HUD).
For example, first-time home buyers in San Diego may be eligible for a deferred-payment loan with 3% interest to cover the down payment on a house, up to 17% of the purchase price. Closing-cost grants are also available to some San Diego buyers. Visit the San Diego Housing Commission’s website (www.sdhc.org) to learn more about these and other first-time home buyer programs for 2014.
That’s just one example of a California home buying program offered at the local level. To find out what kind of support is offered in your city or county, visit the HUD website. HUD has a state-by-state list of programs like the one mentioned above. On the California page, you’ll find a list broken out by city and county. You can find all of these pages with a site-specific Google search like this one:
It’s Not Free Money
Based on the emails we’ve received over the years, I know many people have a misconception about the types of programs mentioned above. Some people interpret the phrase “home buyer assistance” to mean free money. So let’s be clear. We are not talking about government handouts here, or no-risk / no-obligation mortgage loans. The California home buying programs mentioned above, and others like them, do not absolve borrowers of their basic obligation to repay the debt. Nor do they provide “free money” funded by taxpayers.
Programs designed for first-time home buyers typically offer one or more of the following:
- Competitive interest rates, possibly below average market rates
- Educational counseling to help borrowers make informed decisions
- Higher loan-to-value (LTV) ratios, and therefore smaller down payments
- Low-interest loans or grants to help cover the cost of the down payment and/or closing costs
- Some combination of the features above
Notes: This article provides an overview of home buying programs for California buyers. Some are limited to first-time buyers, while others are open to any borrower regardless of previous ownership status. The information presented above was adapted from various websites and sources. We make no claims or guarantees about these programs. To learn more about them, please refer to the official source(s) using the links provided. We cannot answer specific questions about these home buyer programs. Please direct your questions to the appropriate authorities.