Many people dream of owning their home, but for some, the biggest obstacle is the required down payment  and the closing costs. The good thing is that many homebuyers can take advantage of the down payment assistance program in California and closing costs programs that make home buying easier to achieve. 

If you are a first-time buyer or repeat buyer, there are financial alternatives so that you can get help in obtaining your first house. At First House Financing, we take delight in empowering homebuyers with the knowledge and access to these money savings assistance programs that allow you to transition into homeownership easily. 
 

What is a Down Payment Assistance Program?

Down payment assistance programs were created to help alleviate the  down payment costs associated with purchasing a home. These programs can provide grants, second mortgages, and other financial aid to eligible buyers, thereby mitigating the financial burden that comes with paying a hefty down payment. 

There's a common misconception that down payment assistance programs are only for first-time buyers. These days, most programs allow repeat buyers as long as the home is their primary residence and they meet all other qualifying conditions.
 

Types of Down Payment Assistance Programs in California  

We offer many down payment assistance programs in California designed to help homebuyers as much as possible. Here are the most common options:  

1. Grants  

These funds are not required to be repaid,, which makes them the best form of assistance. Usually, they are provided by state and local housing agencies, nonprofit organizations, or private lenders stemming from cities or counties. 

2. Second Mortgages  

Second, Mortgages provide funds that can be used toward the Down Payment and also for closing costs. These loans are offered in assistance with your first mortgage and have to be paid back at the same time. They usually have good terms, which makes them easy to pay off. The benefit of a second mortgage is to provide you funds upfront so you don’t have to use your own cash and can keep it in savings for emergencies. 

3. Grant Second Mortgages  

This is a grant program that includes a 2nd mortgage. The grant does not have to be repaid and is forgiven over a period of time, meaning the home buyer must live in the purchased house for  (3, 5, 10, 15, or 30 years). A 2nd mortgage is placed on the home in the amount of the grant, but is removed once the time period has been completed. 

4. Equity Appreciation Programs  

This program involves the homeowner giving up a portion of the home equity when selling or refinancing the property. The equity portion is usually around 20%. The benefit of this program is you are provided a 20% down payment upfront that usually does not require any monthly payments. For example if the home has $100,000 in equity you owe the original 20% loan back plus 20% equity to the agency which is $20,000 and you will keep $80,000. Not a bad deal for purchasing a home with no down payment out of pocket. 

5. Silent Second Mortgages

A silent second mortgage loan will help cover the down payment and or closing costs, it does not require any monthly mortgage payments until after 30 years has passed. This gives you time to build equity to be able to repay the loan in full later on down the road. This program allows for home buying without having to worry about repaying the loan or monthly payments right away. 

6. Tax Credits

Some local state agencies issue Mortgage Credit Certificates (MCC), for which a federal income tax reduction is provided.  The mortgage credit certificates can also be used to help you qualify for a home loan by reducing your debt to income ratios. If you have a high debt to income ratios this is a great program to use to help bring them down. 

CALHFA Down Payment Assistance Program in California

Such a program in California is the CALHFA Down Payment Assistance program, which provides down payments to buyers for the first time. This program allows people with a low to moderate income to qualify for grants, equity appreciation, or silent second loans so that first-time home buying can become a reality.

Generally, to be eligible for CALHFA Down Payment Assistance, buyers must:

• Comply with income and credit requirements
• Occupy the home as the primary dwelling
• Work with participating lenders of the program

Eligibility Requirements for Down Payment Assistance in California 

These programs all strive for improvement in homeownership, but each program comes with its own unique eligibility requirements. The majority, however, take into account the next set of requirements: 

• Minimum Credit Score – All programs have a minimum credit score for financial reliability.
• Debt-to-Income Ratio – All programs have set debt to income ratio limits.
• Income Limits – All programs have income limits on them 
• Sales Price Limits – All programs have maximum sales price limits
• Property Type & Loan Location – Certain forms of assistance may be limited to certain types of properties in certain locations

How First House Financing Can Help You?

Understanding the assistance programs dedicated to helping with down payments is very complicated, but our team makes it easy. We offer a tremendous opportunity by helping those who want to buy a house in California qualify for the best programs available and access them quickly and easily.

Download our mobile app on the Apple App Store or Google Play Store or you can visit our website at www.firsthousefinancing.com to learn more.

• Learn quick and easy ways to raise your credit scores
• Learn to calculate your income and debt to income ratios
• Get information on down payment grants applicable in your location

As much as we love helping home buyers, our goal is to also educate home buyers so they understand every aspect of the loan process and do not get taken advantage of by loan officers. 

Conclusion

A down payment assistance program in California stands to benefit many home buyers who may have difficulty paying the upfront costs of purchasing a home. There are always programs available for both first-time home buyers and repeat buyers looking to ease the financial burden of purchasing their first home.

First House Financing strives to help clients in the search for the best down payment assistance programs available and to help them receive the maximum amount of assistance. Reach out to us today and start working towards getting your first house!