Making a down payment on a home is difficult for many people, especially those with income limits in certain ranges, or those that can’t qualify for standard mortgages for one reason or another.
Fortunately, on April 5, 2016, CalHFA, or the California Housing Finance Agency, announced a program change to help more Californians or potential Californians qualify for CalHFA conventional mortgages.
They have increased the maximum qualifying income in thirty-five counties in California from 120% to 140% of the county’s median income.
Just to give you an example, for a four-person household in San Diego County, the income limit has increased from $91,00 to $106,250.
But, who qualifies for CalHFA Down Payment Assistance programs?
Well, you can qualify, first off, if you are a first-time home buyer.
This is someone who has not owned a home in the last three years.
If you had previously owned a home, but sold it at least three years ago, then you are a first-time home buyer.
The CalHFA also requires that borrowers occupy the home as their primary residence for the entire term of the loan, unless you either sell the home, or refinance out of a CalHFA program.
The CalHFA Down Payment Assistance programs also tend to be aimed at low to moderate income individuals or households.
Income limits do vary by county, program and household size, however.
They are also regularly updated on the CalHFA site, so be sure to check often to get the best information.
Effective July 18, 2016, the income limit for a four-person household in San Diego is $106,250 for a conventional loan, and $102,450 for an FHA loan.
There are also property sales price limits in place.
Sales price limits are also regularly updated on the CalHFA site, so check to make sure you have the most recent income.
Certain programs may have lower maximum loan amounts than others, so be sure you know your options thoroughly.
So, what are the different kinds of CalHFA Down Payment Assistance programs that are available?
Here’s a quick rundown of our list:
MyHome Assistance Program, Combined with ZIP
MyHome is for first-time home buyers that have good credit.
These funds can be put towards the down payment and/or closing costs.
MyHome is a deferred, simple-interest loan (silent second) that equals 3% of the sales price or appraised value of the home — whichever is less.
The simple interest for a MyHome loan is also 3%, and the maximum debt-to-income ratio, or DTI, is 45%.
Fortunately, a MyHome loan can also be combined with all CalHFA first mortgage programs, including the CalHFA Zero Interest Program (ZIP).
When combined with CalPLUS loans and ZIP, the interest rates can be slightly higher, but may be able to help you buy a home with absolutely no money down.
Talk about a win-win situation for those who have their eyes on a beautiful home in San Diego.
CalPLUS FHA Loan — MyHome and ZIP
As mentioned earlier, when combined with a CalPLUS FHA loan, ZIP is down payment assistance in the form of a deferred-payment junior loan of 3.5% or 4.5% of the first mortgage amount.
The interest rate does increase with a higher ZIP loan, so make sure you check the CalHFA website for current interest rates.
If you were to combine the MyHome loan at 3% and ZIP with between 3.5 to 4.5%, that equals out a full 6.5–7.5% of down payment assistance.
Again, that’s a pretty sweet deal for those struggling to find a way to make a down payment on their desired home.
CalPLUS Conventional Loan — MyHome and ZIP
MyHome and ZIP can also be used with the CalPLUS Conventional Loan.
The Conventional ZIP second loan is a no-interest, silent second loan that is 3% or 4% of the first mortgage amount.
Again, the interest rate can increase with a higher ZIP loan.
If you go about combining the three — a CalPLUS Conventional Loan, MyHome and ZIP — like above, you can come out with between 6–7% of down payment assistance.
Again, not a bad deal at all.
So, let’s look at an example below to see how you could use these CalHFA Down Payment Assistance Programs to get a gorgeous San Diego County home for no money down:
- With a purchase price of $300,000 and estimated closing costs, that comes to $308,400
- Add in a CalPLUS Convention Loan Amount, which comes in at 95% of the purchase price, we have $285,000.
- Next, we take the ZIP, which is 4% of the first mortgage amount, and that equals $11,400.
- MyHome comes in at 3% of the purchase price, which would be $9,000.
- $285,000 + $11,400 + $9,000 = $305,400. That mean’s you’d only need $3,000 to close on your new home.
With the example above, adding principle, 4.5% interest and mortgage insurance, that means your monthly payment would be $2,050.
Not bad at all, right?
CalHFA has plenty of programs to help people who want a gorgeous California home get the down payment assistance they need.
As you can see from this article, there are plenty of ways to qualify and take advantage of the various CalHFA Down Payment Assistance Programs.
What do you think?
Leave a message in the comments section below — or call or text me at (760) 297–4539
Your CalHFA Programs Insider,