Mortgage Info

California Gives First-Time Homebuyers A Break

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Operated by the California Housing Finance Agency (CalHFA), the CalHFA loan (sometimes referred to as the “CHAFA” loan), is available only in California and is designed to provide up to 100 percent financing to prospective eligible first-time homebuyers. Basically, the loan consists of a standard 97-percent FHA-CHFA 30-year fixed-rate mortgage and a three-percent CHFA down-payment-assistance second mortgage, which is also called a “silent” or “sleeping” second. This second mortgage is offered for 30 years at three-percent simple interest. The best part is that all payments are deferred on this second mortgage until one of the following happens: the first mortgage becomes due and payable, the first mortgage is paid in full or refinanced, or the property is sold. The loan program is available to low-income borrowers in all 58 counties, but  moderate-income borrowers will not be eligible in certain counties.  In order to qualify for a CalHFA loan, the following requirements must be met:

  • You must be a first-time homebuyer. CalFHA considers you a first-time homebuyer if you have not owned and occupied your own home during the last three years. This requirement is not necessary if the property is located in a Federally designated “Targeted Area.” Targeted Areas are Census tracts in which 70 percent or more of the families have incomes that are 80 percent or less than the state median family income. For example, in San Diego County, parts of the cities of Imperial Beach, Vista, and El Cajon are Targeted Areas. Some counties, such as Santa Cruz County, have no Targeted Areas.
  • Your annual household income must be within CalFHA’s income limits for the family size and county in which the home is located. For example, if you want  to buy  an existing resale home in San Diego County, you are considered low income if you have a one or two-person household and household income is  $56,880 or less. For that same-size household, you are considered moderate income if household income is $94,800 or less (as a comparison, those numbers are $81,432 and $135,720 in San Francisco County). In San Diego County, if your household contains three or more people, low income is $65,412; moderate income is $110,600. There are different income limits (usually higher) if you are buying a newly constructed home.

  • You must purchase a home that is within CalHFA’s sales price limits for family size and county in which the home is located. For example, in Orange County the current price of a resale home in a Targeted or non-Targeted Area must be $729,750 or less. There are different limits if the home is newly constructed.
  • You must live in the home you are purchasing for the entire term of the loan or until the home is sold or refinanced.
  • You must meet credit, income, and loan requirements for the CalHFA lender and mortgage insurer.
  • You must use one of CalHFA’s approved lenders. CalHFA does not lend money directly to consumers. They use approved private lenders to qualify consumers and make all mortgage loans. Rates can vary depending on the loan program and income level.
  • You must be a citizen or other national of the United States or a qualified alien.

    For more information on the CalHFA loan, including lists of Targeted Areas by county, income limits by county, sales price limits by county, and approved lenders, go to the agency’s official website at www.calhfa.ca.gov/homebuyer/index.htm.

  • Print Date: 2/28/2020
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