Buying a House in California For the First-Time Buyer

Jamell Tousant

August 31, 2022

First-Time Buyer

If you’re a first-time buyer in California, you may have questions about purchasing a home. Fortunately, several resources are available to help you make your dreams a reality. Learn about down payment assistance programs, FHA mortgages, and interest-free second mortgages.

Forgivable equity builder loan

First-time homebuyers can take advantage of a new program that allows them to borrow 10% of the price of the house without having to repay the money for five years. This program is offered by the California Housing Finance Agency and is intended to help low-income Californians achieve homeownership and build wealth.

This new program, called a “Forgivable Equity Builder Loan,” allows first-time homebuyers to borrow up to 10% of the house price, and after five years, the debt is forgiven. This program is available to middle-income families and individuals who do not have a sizeable down payment. To qualify, a family’s income must be below 80% of the median income in their county. So, for example, a family of two earning $60k a year in Los Angeles County would qualify.

California’s new home loan program, the Forgivable Equity Builder Loan, provides first-time homebuyers with an opportunity to borrow up to 10% of the home’s price. The loan can be used for the down payment, closing costs, or even a rate buydown if the buyer is willing to live in the house for five years or more.

Federal housing administration (FHA) mortgage

To qualify for an FHA loan, you must have a FICO score of at least 500 and be able to afford a minimum down payment of at least 3.5 percent. Other qualifications include a stable income and employment history. In addition, the loan must be used for a primary residence, and you must make the required down payment. You must also meet HUD guidelines for a mortgage, which include a back-end debt-to-income ratio of no more than 43 percent of gross monthly income. Some lenders allow a higher percentage.

Several lenders can obtain FHA loans. Using the FHA’s website, you may find a lender that accepts FHA loans in your area. However, you should also check with your local FHA office for additional eligibility requirements and loan costs.

If you are a first-time home buyer in California, there are several programs you can qualify for. The California Housing Finance Agency (CalHFA) offers mortgages for single-family homes, condominiums, planned unit developments, manufactured housing, guesthouses, and accessory dwelling units. You can also qualify for a 30-year fixed-rate mortgage through the CalHFA. In addition to FHA loans, CalHFA programs offer closing cost assistance.

Down payment assistance programs

California has many down payment assistance programs to help first-time homebuyers. But they can be challenging to apply for and receive. For example, first-time homebuyers in California are eligible to receive grant money up to 4% of the purchase price of their new home. However, they must be within certain income limits the U.S. Department of Housing and Urban Development (HUD) set. In addition, many national mortgage programs are available to help first-time homebuyers. While not all federal programs are specifically for first-time homebuyers, many of these programs have low down payment requirements and flexible credit requirements.

Down payment assistance programs for first-time home buyers in California include zero-interest and deferred payment loans. Although the government has capped the total down payment assistance for first-time buyers, many programs are still available to help those in need. The State Housing Finance Agency (CalHFA) administers most of these programs.

Interest-free second mortgage

First-time buyers in California looking to buy a home may qualify for an interest-free second mortgage. This loan can help buyers finance their down payment and closing costs. The interest-free portion of the loan will be forgiven three years after the closing date. However, it would help if you were low-income to qualify for this program.

The California Housing Finance Agency (CalHFA) has numerous programs for first-time home buyers who meet the eligibility requirements. These programs help first-time buyers with their finances and credit histories. If you qualify, you can use one of the CalHFA programs to finance your down payment and closing costs.

You can also use down payment assistance programs to avoid applying for a silent second mortgage. For example, the Fannie Mae HomePath down payment assistance program requires a 3% down payment, with any remaining funds coming from local or state down payment assistance programs. Alternatively, you may be eligible for a down payment assistance program offered by FHA lenders.