Do you qualify for down payment assistance in California?
Let’s Talk About Down Payment Assistance Programs & Options! I am Melissa Kirk, Realtor® and Stephanie Tromerhauser from Preferred Rate appears as an expert in this video.
Let’s dive into the facts, the money for the down payment on your home loan can be one of the largest hurdles for many first-time home buyers. That’s why California offers several options for your down payment and closing cost assistance.
This type of assistance is often called a second or subordinate loan meaning they are “silent seconds”, so payments on this loan are deferred. You don’t make payments on this assistance until your home is sold, refinanced, or paid in full. This helps keep your mortgage payment affordable.
There are several types of programs that offer assistance!
There are programs where the mortgage is insured by the Federal Housing Administration and comes with a 30-year fixed interest rate for a primary home. The FHA has specific borrowing and property requirements that must be met.
Another option is a California program that is also a government-insured loan that comes with a slightly higher 30-year fixed rate but it’s paired with the Cal ZIP that provides 3% or 4% of the loan amount to assist with closing costs or prepaid items only (including mandatory upfront mortgage insurance premium).
California also has a grant program that allows first-time or repeat buyers to combine an insured Energy Efficient Mortgage with a Cal Grant for certain energy-efficient home improvements. The interest rate on the loan is fixed for 30 years.
There is even a School Teacher and Employee Assistance Program. It is designed for first-time buyers who are teachers, administrators, school district employees, and staff members who work at California’s K-12 public schools. These loans provide up to 4 percent of the purchase price toward down payment and closing costs, and can only be used with an eligible CalHFA first mortgage loan. This loan can be used only for down payment assistance and/or closing costs.
Down Payment Assistance Program
“The money you put “down” or the down payment on your home loan can be one of the largest hurdles for many first-time homebuyers. That’s why CalHFA offers several options for down payment and closing cost assistance. This type of assistance is often called a second or subordinate loan. CalHFA’s subordinate loans are “silent seconds”, meaning payments on this loan are deferred so you do not have to make a payment on this assistance until your home is sold, refinanced or paid in full. This helps to keep your monthly mortgage payment affordable.”
MyHome Assistance Program
FHA: MyHome offers a deferred-payment junior loan of an amount up to the lesser of 3.5% of the purchase price or appraised value to assist with down payment and/or closing costs, with a cap of $15,000.
USDA, Conventional: MyHome offers a deferred-payment junior loan of an amount up to the lesser of 3% of the purchase price or appraised value to assist with down payment and/or closing costs, with a cap of $15,000.
VA: MyHome offers a deferred-payment junior loan of an amount up to the lesser of 3% of the purchase price or appraised value to assist with down payment and/or closing costs.
Teacher’s Assistance Program
“The STEAP assistance loan is a deferred payment and interest (2.5%) silent second mortgage up to 3% or 3.5% of the sales price that can be used to satisfy the minimum down payment requirement and help pay buyer closing and settlement costs.
The School Teacher and Employee Assistance Program can only be used with a CalHFA Conventional, CalHFA FHA, or CalHFA VA first loan.
For a complete list of homebuyer assistance programs for teachers, read this California Teacher Home Loan and Assistance Programs.”
Qualifying Criteria
- Primary residence – owner occupied only
- Minimum FICO score: 660
- Debt-to-Income max: 45%
- Sales Price Limit: $765,000
- Maximum CLTV: 105%
- CalHFA approved homebuyer education course is required
- First time home buyers only (cannot have owned a home in the last 3 years)
- Do not have to live or buy in the school district of where you work
- Be employed at a k-12 public or charter school, at a district office, or county/continuation school in California
There are programs to help you get a home loan with bad credit and other challenges in California
Did you know borrowers with not-so-perfect credit may be eligible for FHA home loans in California? Wondering how to get a conventional home loan? Or if you meet conventional loan requirements? Or what is a conventional mortgage?
We’ve got more good tips and info for you! Check out the rest of this video series!