California First-Time Home Buyer Programs of 2019 | Orange County

California First-Time Home Buyer Programs of 2019

We want you to succeed! The Orange County housing market may be shifting to a more balanced market, but the home buying process can still feel daunting and expensive, especially for a first-time home buyer. That's why:

1) The California Housing Finance Agency (or CalHFA) offers several loan programs to assist qualified first-time home buyers get a mortgage.

2) National loan programs offer assistance to home buyers that meet low credit score and down payment requirements.

3) And, The Swan Team wants to help first-time home buyers (like you) take advantage of the right home buyer program when you find your dream home!

Because, our mission is to help you love where you live, and give where you love!

A first-time home buyer program could be the difference between putting a home under contract and not securing the home of your dreams. Let's take a look at how we can help you successfully navigate your home buying experience.

National First-Time Home Buyer Programs

National first-time home buyer programs are offered by most lenders. These programs are worth consideration, especially if you need flexible credit requirements and low down payment options.

  • CONVENTIONAL MORTGAGE - Conventional mortgages are best for low down payments and limited mortgage insurance premiums. This is a home loan that is not insured or guaranteed by the federal government. However, conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Max allow down payments as low as 3% for first-time home buyers or lower-income home buyers. Additionally, if you put at least 20% down, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether - unlike FHA loans.

  • FHA LOANS - FHA loans are best for low credit scores and low down payments. With a credit score of 580 or higher, the Federal Housing Administration allows for down payments as low as 3.5%. With scores as low as 500, the FHA will insure loans to borrowers with a 10% down payment. However, mortgage insurance is required for the life of the FHA loan and cannot be canceled.

  • VA LOANS - VA loans are best for persons of the military and low down payments. For veterans and surviving spouses who wish to buy a home, the U.S. Department of Veterans Affairs assists service members. Providing competitive interest rates and often requiring no down payment or mortgage insurance. Keep in mind, most VA approved lenders require a credit score of at least 640, although there is no official minimum.

  • USDA LOANS - USDA loans are best for low down payments and rural homes. Rural and suburban home buyers may be eligible for a USDA home loan or zero-down-payment mortgage. These loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. However, there are income limitations that vary by region.

CalHFA First-Time Home Buyer Programs

If you haven't owned and occupied your own home in the past three years, you're considered a first-time home buyer in California. If you meet this requirement, you may want to consider one of these CalHFA programs for first-time home buyers.

Are You Eligible?

  • Property must be located in California and be the borrower’s primary residence until it’s sold or refinanced

  • In most cases, borrowers must be first-time home buyers and U.S. citizens, permanent residents or qualified aliens

  • Must have a minimum credit score of 640, in most cases

  • Must meet all income and sales price requirements of the lender and mortgage insurer

  • Must take an approved home buyer education course and obtain a certificate of completion

  • Leaseholds/land trusts and co-ops not permitted

  • Property must be 5 acres or smaller in size

  • There may be additional program-specific requirements

What Are Your Options?

  • Cal-EEM + Grant Program - Best for energy-efficient improvements. This is an FHA-insured Energy Efficient Mortgage for both first-time and repeat home buyers with a 30-year term with a fixed interest rate. This mortgage is combined with a grant of up to 4% of the total loan amount to help borrowers make energy-efficient improvements that are more than the maximum amount allowed by the FHA. Keep in mind, that the Cal-EEM + Grant Program can be combined with either the MyHome Assistance Program or School Teacher and Employee Assistance Program. Keep reading!

  • MyHome Assistance Program - Best for low income, down payment assistance, and closing cost assistance. The MyHome Assistance Program loans are limited to 3.5% of the home's purchase price or appraised value, whichever is lower. This is a deferred-payment subordinate loan that low to moderate income first-time home buyers in California can utilize to make a down payment or cover closing costs when taking a CalHFA mortgage loan. In this case, "subordinate" means it doesn't have to be paid until the home is sold, refinanced or paid off.

  • School Teacher and Employee Assistance Program - Best for teachers, public school employees, down payment assistance, and closing cost assistance. This deferred-payment subordinate loan is similar to the MyHome Assistance Program - as it helps pay for a down payment and closing costs. However as it's name implies, it is reserved for teachers, school administrators, school district employees and staff members of California K-12 public schools. It is important to note that employees of charter schools and county/continuation schools are also eligible. School Teacher and Employee Assistance Program loans are limited to 4% of the sales price or appraised value, whichever is less. As supporters of the schools, we are obviously big fans of this assistance program!

  • CalHFA Zero Interest Program - Best for closing cost assistance. This program can make CalPLUS Conventional and CalPLUS FHA loans even more affordable by paying a portion of your closing costs. The CalHFA Zero Interest Program provides up to 4% of the total loan amount in the form of a no-interest second loan. Payments on a CalHFA Zero Interest Program loan are deferred as long as you live in the home, but you’ll be required to pay it back in full if you sell, refinance, transfer the title to someone else or default on the loan.

The Takeaway

The best advice for a home buyer: see if you qualify for first-time home buyer programs! You are not in this alone! And, you should rely on the professional guidance and advice of a seasoned REALTOR® to help you navigate the home buying process. That's where we at The Swan Team come in!

If you need help preparing to buy or sell in 2018 – Contact Us Now!

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If you want to receive real-time Orange County Housing Reports to your inbox every month – for the full/downloadable market reports and charts – Sign Up Now!

The Swan Team | OC Real Estate

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