Tuesday, February 17, 2015

First-Time Home Buyer Programs with Down Payment Assistance

By Toni Ryan, Princeton Capital

There are several programs available that assist the first time homebuyer in purchasing their first home.  These programs provide up to 105% financing at low rates and allow for higher debt to income ratios.  The eligibility requirements include a minimum of a 640 middle credit score, zero interest second mortgages with deferred payments to cover the down payment and closing. There are maximum household income requirements so it is important to check with your mortgage professional regarding income and property eligibility.

• CalPLUS Conventional Program

The CalPLUS Conventional program is a first mortgage loan insured through private mortgage insurance on the conventional market. This loan is fully amortized for a 30-year term and is combined with the CalHFA Zero Interest Program (ZIP) for down payment assistance only.

• CalHFA FHA Program

The CalHFA FHA program is an FHA-insured loan featuring a CalHFA fixed interest rate first mortgage. This loan is fully amortized for a 30-year term and can be combined with the California Homebuyer's Downpayment Assistance Program (CHDAP).

• Cal-EEM + Grant Program

The Cal-EEM + Grant program combines an FHA-insured Energy Efficient Mortgage first mortgage loan with an additional Cal-EEM Grant, making energy efficient improvements even easier. The interest rate on the Cal-EEM is fixed throughout the 30-year term.

• Placer County First Time Home Buyer Assistance Program (FTHB)

This program is designed to promote home ownership for low-income, first time homebuyers. The assistance is in the form of a deferred loan (second mortgage), due and payable upon sale, default or transfer of property. The amount of assistance cannot exceed $100,000 and no more than forty percent (40%) of a home's value. The maximum sales price shall not exceed $300,000 for single family homes and $185,000 for condominiums. The combined loan to value cannot exceed 97%. This program does require the buyer to have 3% of the sales price for a down payment but those funds can be a gift from a family member.
Additionally, be sure to ask your lender if you qualify for the Mortgage Credit Certificate Tax Credit Program (MCC). This MCC Tax Credit program is a federal credit which can reduce potential federal income tax liability, creating additional net spendable income which borrowers may use toward their monthly mortgage payment. This program may enable first-time homebuyers to convert a portion of their annual mortgage interest into a direct dollar for dollar tax credit on their U.S. individual income tax returns. Borrowers would need to seek the advice of a financial professional.
The options are available to make homeownership a reality. Not all mortgage lenders offer these programs so check with a trained mortgage professional to understand your choices.
Prices are affordable and rates are low. Now is the time to take advantage of the assistance available and buy a home.

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