Down Payment Assistance | CALHFA First Time Homebuyer Program |
The state of California offers down payment assistance program through the California Housing Finance Agency (CALHFA), which has been partnering, preserving and promoting housing opportunities for over 40 years.
Current Programs offered:
The CalPLus FHA program is a first and second loan program that combines low rates with down payment assistance. The program is very generous in terms of rates and assistance provided and can be combined with the CHDAP program. As of July 1st the program will offer a 30 year 0% silent second mortgage for 3.5% of the loan balance plus $6,500. The first loan’s interest rate is set by CALHFA and can be viewed on CalHFA’s website.
The CHDAP program offers first time homebuyers (FTHB) the opportunity to limit the out of pocket investment when purchasing a home. The program offers down payment assistance in the form of a silent second toward the purchase of a new home. The 3% down payment assistance can be used toward the down payment or loan closing costs. CHDAP in a Nutshell: First time homebuyers can borrow 3% for 30 years at 3.25% simple interest. Buyers must obtain an FHA, USDA or VA home loan and meet minimum loan guidelines. Borrowers must make under a specified yearly gross income determined by county and number of residents.
The CalPLus conventional program is a first and second loan program that combines low rates with down payment assistance. The program is very similar to the FHA program, although it comes with an extra perk. The program allows a lower PMI (mortgage insurance) coverage which results in a lower PMI monthly payment. As of July 1st the program will offer a 30 year 0% silent second mortgage for 3.0% of the loan balance plus $6,500. The first loan’s interest rate is set by CALHFA and can be viewed on CalHFA’s website. This program can also be combined with the CHDAP program.
If you live in CA, YES! All counties in CA including San Joaquin, Sacramento, El Dorado, and Placer.
Q. What’s a silent second?
In this case it’s a loan that is charged simple non-compounding interest due without monthly payments in 30 years. For example: If I borrowed $3,000 I would accrue $97.50 (@3.25% interest) per year for 30 years. Even though the loan is accruing interest I’m not required to pay interest on interest (like I do on a credit card).
Q. What does CHDAP stand for?
The California Housing Down payment Assistance Program (CHDAP)
Q. Is there a minimum credit score requirement?
Yes, borrowers must a have a credit score of 640 and above
Q. Does it require additional time to close?
Yes, typically and extra 15 days. The first loan is underwritten by your lender then it’s sent to CALHFA where it’s underwritten to make sure it fits their guidelines. Turn around time for CALHFA can be anywhere between 2-10 business days. Files are underwritten in the order they are received.
Q. What are the income limits for my area?
You can find the income guidelines for your area and family size HERE
Q. Are there sales price limits?
Yes, you can find the limits HERE
Q. Whats a target area?
CALHFA has target areas that increase income limits. You can view the target areas HERE
The increased income levels can be viewed HERE.
Q. What do I need to qualify?
- 2 Months Bank Statements
- 3 Years Taxes
- 3 Years W2’s/1099’s
- Driver’s License
- 1 Month Pay Stubs
Q. Do I need to take a home buyer course?
Yes, but it can be done online or in person with an approved provider. I have access to free local classes from certified professionals. The classes are helpful and prepare you for home ownership.
Q. Do I have to pay the money back?
The funds are loaned for 30 years with a simple interest rate (varies from 0%-3.25%) for 30 years. Payments are not required during the 30 years; however, the loan’s principle and interest are due all at once (balloon payment) at the end of the 30 years. You will also have to repay the loan if you sell, refinance (Subordination is possible) or no longer live in the property before the end of the 30-year loan term. If you choose, payments may be made during the 30 years in any amount you wish. There is no prepayment penalty.
Q. Do I need to be a First Time Homebuyer?
Q. What’s considered a first time homebuyer?
No ownership interest in the past three years. This is documented by 3 years taxes.
Q. Can you provide an FHA CALPLUS + CHDAP scenario for me?
Of Course! 250k Sales Price for a first time home buyer with 640 mid credit score
CalPLUS – Second Loan – $8,443.75 (3.5% of Loan balance) + $6,500 = $14,943.75
CHDAP – Third Loan – $7,500 (3% Sales Price)
Combined CalHFA Assistance = $22,443
Estimated Total funds to close -$20,000 (includes down payment, Closing Costs, and Prepaids)
So in this scenario the borrower would have more downpayment assistance than needed to close so the borrower would be able to purchase the home without an initial financial investment.
Q. Where can I find more info?
If you are an info person like me, you will enjoy the program guide HERE