What they are and how they can help in 2023.

What is a first time home buying program? A common question I have got which lead me to write you all about this topic today. I remember when I was first starting to look for a home I was told I needed to put down a 20% deposit in order to purchase, I needed to use a certain loan to move forward and a few other pieces of information that could’ve deterred me from moving forward.

One thing that no one told me about was first time home buying programs, what they were and how I could qualify able to help. These programs may assist with your down payment or closing costs, including charitable and government sponsored programs. There can be given at a local or federal level and I will give some information how how to find both types today. So my goal today is to provide you as much information I can to help you get to your goal of buying a home.

When you decided to purchase a home you made sacrifices, plans and stayed focused in order to achieve your goals. Why not see if there is a way to save some of that money? 

Or on the flip side, you may need more money in order to do updates on a home you want to buy and using a first time home buyer program may give you some more cash to do so.

For whatever situation you’re in there may be a FTHB program that will help you. So let’s get into it!

Types First Time Home Buying Programs?

Down Payment Assistance ( DPA)

Down payment assistance financing program that helps make homeownership a reality for homebuyers who may not have enough money for a down payment. Both you and the home have to meet certain requirements in order to receive help from the program. If you qualify, you may receive the DPA funds as a grant toward your down payment and potentially for closing costs as well. It may vary but some of the programs still require a small contribution from the buyers toward the down payment.

Forgivable Equity Builder

The Forgivable Equity Builder Loan gives first-time homebuyers a head start on this with immediate equity in their homes via a loan of up to 10% of the purchase price of the home. The loan is forgivable if the borrower continuously occupies the home as their primary residence for five years

Borrower Requirements

• Be a first-time homebuyer.
• Occupy the property as a primary residence; non-occupant co-borrowers are not allowed.
• CalHFA borrowers must complete homebuyer education counseling and obtain a certificate of completion through an eligible homebuyer counseling organization.
• Meet county income limits set by Fannie Mae
  •  CalHFA’s Income Limits for Forgivable Equity Builder Loan – Income limits are determined by Fannie Mae and are subject to change without notice. This document is only a guide, and you should contact a lender for more information.

Property Requirements

• Be a single-family, one-unit residence, including approved condominium/PUDs
  • Guest houses, granny units and in-law quarters may be eligible
• Manufactured housing is permitted
• Condominiums must meet the guidelines of the first mortgage

MyHome Assistance Program

CalHFA Government Loans (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.

CalHFA Conventional Loans: 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.

Borrower Requirements

• Be a first-time homebuyer.
• Occupy the property as a primary residence; non-occupant co-borrowers are not allowed.
• CalHFA borrowers must complete homebuyer education counseling and obtain a certificate of completion through an eligible homebuyer counseling organization.
• Meet CalHFA income limits for this program.

*In the case of conflicting guidelines, the lender must follow the more restrictive.

Property Requirements

• Be a single-family, one-unit residence, including approved condominium/PUDs
  • Guest houses, granny units and in-law quarters may be eligible
• Manufactured housing is permitted
• Condominiums must meet the guidelines of the first mortgage

*In the case of conflicting guidelines, the lender must follow the more restrictive.

CalPLUS FHA Program

The CalPLUS FHA program is an FHA-insured first mortgage with a slightly higher 30 year fixed interest rate than our standard FHA program and is combined with the CalHFA Zero Interest Program (ZIP) for closing costs. ZIP is a zero interest junior loan in the amount of up to the 3% of the first mortgage loan in a deferred payment junior loan.

Borrower Requirements

• Occupy the property as a primary residence; non-occupant co-borrowers are not allowed.
• CalHFA borrowers must complete homebuyer education counseling and obtain a certificate of completion through an eligible homebuyer counseling organization.
• Meet CalHFA income limits for this program.

Property Requirements

• Be a single-family, one-unit residence, including approved condominium/PUDs
  • Guest houses, granny units and in-law quarters may be eligible
• Manufactured housing is permitted
• Condominiums must meet the guidelines of the first mortgage

Review the sections below to find out more about the CalPLUS FHA program.

Chenoa Fund

The Chenoa Fund homebuyer assistance program offers two down payment assistance programs, the Chenoa Fund FHA Advantage , and Chenoa Fund Conventional Advantage.

Both the Chenoa Fund FHA and Conventional Advantage assistance programs provide between 3% to 5% down payment assistance in the form of a 2nd mortgage ( junior loan) to satisfy the minimum down payment required by FHA or Conventional financing.

There are four features of the Chenoa Fund mortgage assistance program that make it different than other homebuyer assistance programs:

1. Do not have to be a first time homebuyer (FHA option only)
2. No income limit
3. More buying power – debt-to-income ratio’s up to 50% for the Conventional Advantage and up to 55% for the FHA Advantage
4. High balance loan amounts allowed (FHA option only)

How To Apply For These Programs

How do I apply for this loan program?
Since these programs are not offered by a direct lender, these mortgage products are offered through private loan officers who have been approved & trained by the agencies that provide them. These loan officers can help you find out more about these programs and guide you through the home buying process.

San Diego First Time Buyer Programs

Another step to looking for first time buyer programs is looking local. Each city may have different programs with different programs that may help you buy a home. If you are in San Diego I would check out https://www.sdhc.org/housing-opportunities/first-time-homebuyers/ for more information on the different programs and what are the requirements for each program.

I hope today’s article helps anyone who is looking to buy a home and look into more avenues on how to save money when doing so. I also want to end with this, if you are trying to use these programs because you don’t have any money to put down I would consult your lender or real estate agent. After speaking to one of my preferred lenders Dennis Angstrom (dangstrom@emortgagecapital.com) these programs may have higher interest rates which can lead to higher monthly payments. So you want to make sure moving forward with one of these programs works for your situation and can help (not hurt) your goal of buying a home.