First Time Home Buyer Programs
While program requirements may vary from agency to agency, the following are typical requirements: A first-time home buyer is most often defined as someone, including his or her spouse, who has not had an ownership interest in a principal residence at any time during the past three years. The term includes displaced homemakers and single parents. This requirement is not necessary if the property is located in a federally designated target area.
The buyer must meet income requirements:
· Low Income – 50 to 80 percent of the area median income (AMI)
Moderate Income – 80 to 120 percent of the AMI
The qualifying income includes the total household Income: the income of all adults 18 years of age or older who are residing in the property.
· Maximum purchase price may not exceed limits established for the area.
Applicant may be required to live in the home being purchased for the entire term of the loan, or until the home is sold or refinanced.
· The program is not eligible for property purchased as an investment or rental.
· If the assistance is a loan, the applicant may be required to provide a down payment.
Applicant must complete an agency-approved home buyer education training class.
· For local programs, the prospective property must be located within the city limits or unincorporated county areas.
· Applicant must be a citizen of the United States or a qualified alien.
Common Programs & Loan Types:
There are several types of finance assistance programs offered for first-time buyers. Down payment assistance is the focus of several programs. Others offer specific loan products designed to help first-time home buyers. The following are the most common types of programs that are currently offered and a list of typical conditions attached to a loan program:
Down Payment/Closing Cost Assistance:
Recently this type of assistance has been taken away, but there are new programs all the time.
Second Loan (Second Mortgage):
A mortgage loan in addition to the first, or primary, mortgage loan. This is a loan subordinated to the first mortgage.
Shared Appreciation Loan:
This is applicable to city and county down payment-assistance programs. It involves a loan with a zero or low-interest rate in exchange for sharing the property’s increased future value with the lender.
The appreciation is calculated by subtracting the original sales price from the current sales price or the current appraised market value. The principal balance amount plus a share of the appreciation will be due at the end of term or when the borrower sells, rents, or transfers title of the property.
A second, third, or fourth mortgage that does not have to be repaid until the end of the loan period, the house is sold or refinanced, or title of property is transferred.
A small loan (or grant) that has to be repaid under certain conditions but otherwise becomes a true grant and does not have to be paid back.
Federal Programs: U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Web site: www.hud.gov
First Time Home Buyer Downpayment Assistance Program
On July 30, 2008, President Bush signed into law the:
Housing and Economic Recovery Act of 2008 (HERA). This piece of historic legislation will assist an estimated 400,000 homeowners facing foreclosure, many of whom reside in California, by allowing them to refinance their current mortgages with a Federal Housing Administration
Another centerpiece of this legislation is the creation of a $7,500 tax credit for first-time home buyers and the continuation of the Hope for Homeowners program.
Effective Oct. 1, 2008, the bill also will permanently increase FHA, Fannie Mae, and Freddie Mac loan limits.
Under HERA, the new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500. Both new loan limits will be effective upon the expiration of the Economic Stimulus limits on Dec. 31, 2008.
HOPE FOR HOMEOWNERS PROGRAM:
Hope for Homeowners maintains FHA’s long-standing requirement that new loans be based on a family’s long-term ability to repay the mortgage. By continuing to slow the rate of foreclosures, this program will support FHA’s existing effort to stabilize local housing markets. From Sept. 2007 to June 2008, FHA has guaranteed more than $93 billion of mortgage capital. FHA allows only owner-occupants to be eligible for FHA-insured mortgages. Borrowers must also meet the following eligibility criteria:
• Their mortgage must have originated on or before Jan. 1, 2008
• Their mortgage debt-to-income must be at least 31 percent
• They cannot afford their current loan
• They did not intentionally miss mortgage payments
• They do not own second homes
Voluntary Lender Participation: FHA will continue to offer lenders an alternative to foreclosing on borrowers. Similar to FHA Secure’s recent expansion, lenders will be encouraged to write down the outstanding mortgage principal balances to 90 percent of the new value of the property. In many cases, reductions in principal will cost lenders less than the losses associated with foreclosure; however, lender participation is voluntary.
Program Timeline: The program will last Oct. 1, 2008, through Sept. 30, 2011. Since Sept. 2007, FHA Secure has helped more than 290,000 families obtain safer, more affordable mortgages. FHA Secure is on pace to help 500,000 families by the end of the year.
CALIFORNIA HOUSING FINANCE AGENCY (CalHFA)
Web site: www.calhfa.ca.gov
First Mortgage Loan Programs
- 35-Year interest-only PlusSM
- 40-Year Fixed Mortgage
- 30-Year Fixed Mortgage
- 30-Year Fixed Government Insured/Guaranteed Mortgage
Down Payment-Assistance Loan Programs
- California Homebuyer’s Downpayment Assistance Program (CHDAP)
- Extra Credit Teacher Home Purchase Program (ECTP)
- High Cost Area Home Purchase Assistance Program (HiCAP)
CALIFORNIA DEPARTMENT OF VETERANS AFFAIRS (CalVet)
Web site: www.cdva.ca.gov/CalVetLoans
CalVet Home Loan Purchase Program
NATIONAL Home Buyer’s FUND
Kathy Dyer Realtor CABRE #01723710
KW Coastal Estates
Carmel Ca. 93923