First-Time Homebuyer

Many times home buyers call asking about first-time homebuyer programs.

In the spirit of full disclosure, let's set the record straight. First-time buyer programs are the same as all other programs.

Often, first-time buyers are directed to FHA loans as they can sometimes be easier to qualify for. If you Google first-time buyer programs, you'll get many lenders offering FHA loans. But FHA loans are open to anyone and may not be the best option for your needs.

Lenders love FHA loans because the government guarantees them, protecting the lender - not you.

If you have little or no money for a downpayment, a property (not you, but the property location) may qualify for a USDA loan, but again, these are for anyone, not just first-time homebuyers.

My advice is to forget the term "first-time buyer" and focus instead on what size mortgage you qualify for. From there, your loan expert will determine what is the best loan program for you.

Down Payment Assistance Programs

Statewide, there are various down payment assistance programs. A few may be for first-time buyers but many are open to anyone with a limited income or who are willing to buy in revitalization areas.

GOOD NEIGHBOR NEXT DOOR

A HUD (Housing and Urban Development) program that provides aid - a discount of 50% on a home's list price in revitalization areas. This is open to law enforcement officers, firefighters, emergency medical tech, and school teachers.

Pros

• Deeply discounted home prices
• Can use with FHA, VA or conventional financing, or cash
• Can sell after 36 months and keep the profits

Cons

• Limited number of homes available for a limited timeframe
• Must live in property for 36 months
• Homes are sold “as-is” with no buyer’s warranty

HOMEPATH READY BUYER PROGRAM

is a little-known initiative geared toward first-time buyers interested in foreclosed homes that are owned by Fannie Mae. After taking a required online home-buying education course, eligible borrowers can receive up to 3 percent in closing cost assistance toward the purchase of a HomePath property. The trick is finding a HomePath property in your market, which might be a challenge since foreclosures account for a smaller chunk of listings today.

Cal HFA - CALIFORNIA HOUSING FINANCE AGENCY

A first-time homebuyer program to help first-time buyers with fixed-rate loans and the option to roll in the down payment and closing cost assistance into your mortgage.

You must:

• have a minimum credit score of 640
• meet CalHFA's income limits based on your specific area
• must attend a homebuying counseling course and present a certificate of completion

The Property Must:

• not be priced more than  $705,000
• must be located within California and used as a primary residence until it’s refinanced or sold
• must be a single-family, one-unit home
• some condos, accessory dwelling units (guest houses and in-law quarters, for example), and manufactured homes are permitted
• land trusts and leaseholds aren’t eligible
• must not have a lot size of more than 5 acres

Local First-Time Homebuyer Programs and Grants 

In an effort to attract new residents, many cities offer first-time homebuyer grants and programs. The aid comes in the form of grants that don’t have to be repaid or low-interest loans with deferred repayment to cover down payment or closing costs. Some programs may have income limits, too.

Pros

• Offers down payment and closing cost assistance to bridge gap in cash savings
• Loans come with low or zero interest rates

Cons

• Income limits typically apply, depending on the program
• Some loans have to be repaid when you sell the home

Contact a local HUD-approved housing counseling agency to learn more about first-time homebuyer loans in your area.

Read Why Would I Want to Buy a Home, then call me and let's talk.