Good news! The California Housing Finance Agency (CalHFA) just announced they will increase the maximum DTI ratio limit from 43% to 45% when using a CalHFA, CalPLUS first lien and combining it with the CHDAP down payment assistance silent second mortgage program. See CalHFA Bulletin 2014-06
The Consumer Financial Protection Bureau (CFPB) recently put into place QM regulations that limited the maximum DTI ratio on a loan to 43%, so CalHFA fell lockstep in line and reduced their max DTI to conform. However, the CFPB made a final announcement that state housing agencies like CalHFA are exempt from needing to conform to the Qualified Mortgage requirements.
Wait What….Something Changed?
Back in June 14, 2013, CalHFA had announced some sweeping reforms to their qualifying requirements in order to comply with the CFPB’s Qualified Mortgage DTI regulation. That reduced the maximum DTI ratio to 43% and resulted up to a 20% reduction on how much a buyer could qualify for.
Prior to that announcement, CalHFA accepted DTI ratio’s up to 50-55%, which is not necessarily a good thing.
CHDAP DTI Ratio is Still 43%
When a lender combines the CHDAP with their own first lien, the max DTI is 43%. When CHDAp is used with a CalHFA 1st lien program, the DTI is 45%.
What Does 45% DTI Mean for First Time Home Buyers?
It means borrowers will now qualify for just a little bit more when using the CalPLUS w/ ZIP, the Extra Credit Teacher home buyer assistance program, the 3% CHDAP assistance program, or the CalHFA FHA mortgage.
How much more? About $11,000 more than under the 43% DTI cap guideline.
Do You Qualify for a CalHFA First Time Home Buyer Program?
Contact me, or call (951) 215-6119 and I will provide you with a side by side comparison of home buying options using many different mortgage and home buyer assistance programs.
FYI – You might find that the CityLIFT assistance program may be better than a CalHFA program or even a USDA $0 down payment program.