Payment loan

First-time home buyer? California grants 0% down payment loan

Low-income Californians looking to buy a home have a new tool at their disposal: an interest-free loan to use for their down payment that, if certain criteria are met, doesn’t have to be repaid.

The California Housing Finance Agency began offering this assistance last month through the Forgivable Equity Builder Loan Assistance Program. The Times profiled the program in March as part of a series on how to buy a home in Southern California.

Here are some more details on what’s on offer, as the state tries to make it easier for first-time buyers in a brutal housing market.

Am I entitled to the loan?

To qualify, you must be a first-time home buyer and have a household income no higher than 80% of the median income in your area, generally defined as low income. In Los Angeles County, that means you need a household income of $68,880 or less.

If you meet these criteria, you can get up to 10% of the purchase price of your home to use for your down payment.

Previously, low-income households could receive up to 3.5% of the purchase price of their home through a different state program. This money was not only less, but also had to be repaid with interest.

Will I have to repay the loan?

The Forgivable Equity Builder Loan carries a 0% interest rate and is fully forgiven if you stay in your new home for five years. If you don’t stay in your house that long, you will have to pay back some of the money.

The loan is for your down payment and must still qualify for a mortgage, which covers the remaining cost of the home and the accompanying monthly payment.

How can I apply for this program?

Eligible Californians can apply for the assistance through state-approved private lenders. A list is available here.

It is important to work with a real estate agent and a lender who is familiar with state assistance programs and their different criteria. The California Association. of Realtors has a searchable database that allows you to search for other public and private assistance programs based on certain criteria, such as income and employment.

You can read more about this particular zero interest loan here.

Where and what type of households does this program cover?

You can use down payment assistance to purchase a single family home, townhouse or condo throughout California.

Since the down payment program is limited to low-income shoppers, it will be most helpful to people buying in more affordable places.

Why is the state doing this?

Soaring home prices, accelerated during the pandemic as people sought more living space, have made buying a home even more out of reach for many Californians, especially first-time buyers. time. The state is looking for new ways to help.

“Home equity has proven to be one of the strongest ways for families to create and pass on intergenerational wealth, and CalHFA is committed to improving equitable access to homeownership for all Californians,” said Tiena Johnson Hall, executive director of CalHFA, in a statement. program was announced.

The Times has heard from many readers how difficult and confusing it can be to embark on the process of buying a home. To make some technical information easier to understand, we’ve put together the Great SoCal House Hunt, a step-by-step guide to buying a home for the first time in Southern California. You can start here.