California officials launched a new program in April that allows first-time home buyers to make a down payment at 0% interest.
The program, the Forgivable Equity Builder Loan, provides forgivable loans to home buyers up to 10% of the home’s purchase price.
“We must use every tool in our toolbox to tackle the housing affordability crisis head-on,” Governor Gavin Newsom said in an April statement announcing the program.
And the biggest advantage? If the homebuyer stays in the home for five years, they don’t have to repay the junior loan, according to the California Housing Finance Agency.
However, borrowers may have to repay part of the loan if they stay in the house for less than five years, officials said.
The loan has a 0% interest rate, according to the California Housing Finance Agency.
“Interest rates on the first CalHFA mortgage will vary based on your financial circumstances, lender costs, and other factors. Interest rates can also change daily. We recommend that you contact a preferred loan officer to get an accurate quote for this program. received, “the The website of the Housing Finance Agency states.
State officials said the goal of the program is to give first-time homebuyers an edge with immediate equity, which will help Californians build and pass on intergenerational wealth.
The relief comes as median California home prices rise to new heights and interest rates hit their highest levels in more than two years.
Only 24% of California households could afford to buy the home with an average price of $797,000 in the first quarter of 2022 — down from 27% in the first quarter of 2021, according to the California Association of Realtors.
“Owning a home represents connection, stability and has long been recognized as one of the best ways to build wealth, but for far too many Californians, the dream of home ownership remains just out of reach,” said the Secretary of Business, Consumer Services and Housing Agency. Lourdes Castro Ramirez.
The loan is available to Californians with incomes less than 80% of the Area Median Income in the county where the property is located.
That means the income limit will be different based on where people want to buy a home.
For example, a Sacramento family can earn up to $72,700 and qualify for the loan, while in Santa Clara County the limit is $118,960.
In Los Angeles County, according to the Fannie Mae Lookup Tool, people should earn no more than $68,880 to qualify for the program.
The loan could be used for down payments or closing costs, officials said.
Other borrower requirements
- Become a first home buyer
- Use the property as your primary residence
- Complete homebuyer counseling and receive a certificate of completion through an eligible homebuyer counseling organization.
Are there requirements for the type of home for which you need a loan?
It must be a single-family home, single-family home. (That includes approved condominiums/PUDs.)
How to apply?
Families who believe they are eligible and would like to apply can click Find a Loan Officer and contact someone in their area.
When you contact the loan officer, have these documents ready to answer questions:
- pay slips
- Bank statements
- Work History
- Previous tax returns
More information about the program can be found here.
Suggest a correction