California’s down payment assistance programs are the most confusing and least understood part of the home buying process, even for many lenders! Most first time home buyers (and current home owners) are not aware down payment assistance or closing cost assistance programs even exist, and if they are aware, have no idea who to speak to, where to go, or who can help them.
Common Question I’m asked: Who do I contact about qualifying for down payment/closing cost assistance from the city, county, state, or a non-profit agency?
The Answer: Me. For real…call me direct: (951) 215-6119
The lender who qualifies you for the loan does all of that….it’s not a two part process. The problem is most lenders are not approved to offer all (or any) of the assistance programs. So most will not inform you about all your options…..nice huh? Many lenders even claim you don’t qualify for any assistance programs to prevent you from working with a lender who can offer assistance.
(FYI – yes, I have access to almost every home buyer assistance program out there….and yes, I have referred buyers to other lenders for when I couldn’t help them)
Home buyer assistance is commonly offered from the state, county, and/or city level, as well as from certain non-profit or government entities.
Every program has it’s own unique set of qualifying criteria and features, which adds to the complexity of qualifying and processing of a loan application. The more local the assistance program, the more complex or ‘quirky’ it becomes. Always check with the lender (me) to find out if assistance funds are still available before making an offer on a home.
Below is a brief summary for the more common down payment assistance programs available. If you have time to kill, read the info below and click on the links for more confusing details.
To avoid developing a splitting headache from researching boring mortgage stuff for the next 3 hours, call me direct (951) 215-6119.
Down Payment Assistance Options
California Homebuyer’s 3% Down Payment Assistance Program (CHDAP) – Offered by the California Housing Finance Authority and available throughout all of CA. This program provides a 3% deferred loan (3.25%) that can be applied towards meeting part of FHA’s 3.5% down payment requirement or be used to pay closing costs. There are credit and income restrictions. Buyer must contribute at least 1% of their own funds towards the purchase of the home. This is a very good home buyer assistance program.
CHF 3% Platinum Grant – 3% assistance from a government entity who’s goal is to provide affordable housing programs to California residents. This is not limited to first time buyers, is available in all counties, and literally provides a grant (free money) to help you purchase a home. Is free always the best? No, the interest rate tends to be .5% to .75% higher than the normal FHA rate. Call me to compare options.
CHF 3% ACCESS Down Payment Assistance – CHF ACCESS offers 3% down payment assistance in the form of a second lien. Not limited to first time buyers, available in all counties, and has flexible qualifying credit requirements. It’s possible to qualify down to 580 FICO credit score. Call for more details.
Riverside County Down Payment Assistance is funded by the Economic Development Agency (EDA). They have three programs that offer assistance to home buyers with low to moderate income. While these programs can offer up to 20% down payment assistance, it does require decent credit history and does have more restrictive debt-to-income qualifying ratios that can prevent buyers from qualifying for much higher priced homes….even with the large down payment. These programs also tend to take 60+ days to close escrow. Seller s know that and often toss your offer in the garbage when using these programs…but not all the time.
- First Time Home Buyer (FTHB) – Program provides down payment assistance to lower income persons in the form of a silent second mortgage. The second mortgage is forgiven after 15 years. Amount of assistance depends on buyers qualifications and price of the home. Priority is given to section 8 participants. May purchase new or existing homes (doesn’t have to be a foreclosures), and the county will require the review of a home inspection which often requires repairs be made by the seller. Most homes in our market are sold ‘as-is’, and this presents a big problem. And what seller, whether bank owned, a short sale, or regular sale, is looking to accept offers take 60+ days to close escrow and need to possibly make repairs?
- Redevelopment Homeownership Program (RHP) – Assistance to first time buyers in unincorporated areas of Riverside County and must be in compliance with Community Development Laws. Assistance amount is for what a buyer needs and qualifies for, in the form a silent second mortgage. Silent second mortgage is forgiven after 45 years. If selling home in the future, home is subject to re-sale restrictions to other low income buyers. Refinancing will cause the loan to be repaid in full. Short sale, standard, and bank owned homes qualify for purchase. Again, a home inspection must be submitted to the county for review and repairs made. Having to sell the home in the future to only other low income buyers is not a good thing.
- Neighborhood Stabilization Homeownership Program (NSHP) – Assistance for FTHB’s to purchase only bank owned/foreclosed homes in targeted areas of Riverside county. Must meet the program income & credit guidelines. The assistance is in the form a second mortgage and becomes forgivable after 15 years. Sell or refinance before that and it must be paid back….ouch! Purchase price must be 1% below appraised home value. A home inspection must be reviewed by the county and repairs are often required. This means seller may need to drop the sales price and make repairs noted on the inspection report. Bank owned/REO foreclosures typically will not accept offers from buyers using this program because they will not make repairs or drop price to satisfy Riverside County. Isn’t that ironic? Using this program usually leads to a long drawn out and painful home buying experience.
San Bernardino County offers similar EDA down payment assistance but exhausted all of their NSP assistance funds. Here is one county program.
- San Bernardino Home Ownership Assistance Program is offered by the Dept. of Community Development and Housing. Funds can be used for down payment or closing costs, in the form of a deferred silent second mortgage. It defers at a rate between 10% to 20% (that’s high) and is forgiven after 20 years. If sold, refinanced, or or failure to occupy the home, it will trigger repayment of the loan of the full deferred amount….you cannot rent it out. To qualify, you must have lived or worked in S.B. County1 year prior to application and contribute 3% of your own funds towards buying the home. Not available in Chino, Fontana, Ontario, Redlands, San Bernardino, Upland or Victorville.
San Diego, Orange County, Los Angeles – Call for details on available county specific down payment assistance programs.
Neighborhood Housing Services of the Inland Empire (NHSIE) - Offers down payment assistance to people in Riverside and San Bernardino through three programs.
- CalHome – Offers up to $40,000 in the form of a silent second mortgage, deferred for 30 years at 3%. Geared towards helping lower income first time buyers purchase existing homes, must qualify for a conventional fixed rate home loan. Assistance offered at the discretion NeighborWorks Homeownership center. Buyer must contribute 3.5% of own funds towards the purchase transaction and approval is subject to property inspection and any repairs requested.
- HomeStart Advantage - $25,000 loan for DPA, it’s a 20 year second loan at 5%, minimum FICO credit score of 640, subject to appraisal and home inspection. Buyer must contribute 3.5% of own funds towards the transaction. Income limit is 115% HUD AMI….little higher income limit than CalHome.
- HomeStart Beginnings – $25,000 loan for DPA, it’s a 20 year loan deferred for 3 years, and then start paying loan after that at a rate of 7%. Other features are similar to the Advantage program.
City funded home ownership down payment assistance programs do exist, and have very similar features to the county or NHSIE programs…and some have some funky equity sharing and recapture features. Equity sharing means that if you sell your home, you have to split a certain percentage of the equity of the home with the city….splitting profit with the city!
If you would like to find out if a particular city has an available home ownership / down payment assistance program that you may qualify for, please call me directly (951) 215-6119.
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