About: There are actually a lot of different options for numerous homebuyers to utilize when trying to purchase their first home. This specific loan is available for people of all annual income levels. You don’t have to meet certain income requirements if you want to utilize this loan to purchase your first home in California. This can come from Freddie Mac or Fannie Mae. The HomePath Ready Buyer Program is also offered by Fannie Mae. It allows the borrower to purchase a foreclosed property that is owned by Fannie Mae. If you want to purchase the home through this program, you only need to put 3% down on your purchase while also having the opportunity to get 3% of your home’s value back from the assistance you receive with the overall closing costs. To utilize this loan, you must put down at least a 3% down payment. Additionally, you have to have at least a 620-credit score minimum. For most people, they are able to discontinue their mortgage payments after only a few short years.
Overview: This loan was created to help those homebuyers who have incomes that are considered to be quite low in comparison to other homebuyers in California. This specific loan is great for you if you don’t have the resources or the ability to pay the upfront money that is usually required for conventional loans. The Conventional 97 (Fannie Mae and Freddie Mac) loan allows you to go around the usual 5% down payment requirement. Given their greater amount of accessibility to the average first time home buyer, these loan programs have become extremely popular throughout the past few years.
Pros & Cons: The most attracting factors here are the extremely low-down payment requirements. For most conventional loans you have to put at least 5% down for your down payment. For the Conventional 97 loan, you only have to front 3%. Additionally, you don’t have to obtain an amazing credit score to get approved for this specific loan. You can have a fairly average line of credit and you are still most likely going to get approved for the financial assistance you need to purchase your first California home. There are various types of loans you can utilize that are qualified under the broad title of “Conventional 97”. The only deterrent that is usually reference here is the fact that you could potentially have higher interest rates when you utilize these loans given you aren’t required to assume a lot of risk.
Summary: If you have a lower annual income than most people who live in California, this loan option may be extremely attractive to you. Living in an underprivileged area could also allow you to not have any specific income requirements to be considered eligible for this loan. These types of loans don’t require you to assume a lot of risk up front so you can purchase your dream home while also not having to worry about extreme financial burdens. Although this is true, you should always look at other loan programs that may have lower interest rates that you might qualify for as well. If you don’t qualify for any and this is your only option, it is still a great choice that has numerous short terms and long-term benefits.
About: These loans are specifically for veterans and active duty service members. The best part about these loans is that you don’t have to put down any money for a down payment. Also, you only need to have a minimum credit score of 620. This value is extremely low which allows for numerous people to take advantage of the benefits the VA loan has to offer. Unlike the FHA loan, you don’t have to worry about ongoing mortgage insurance payments after you close on your new house. You will also receive a government guarantee when you utilize the VA loan because it is supported by the Department of Veterans Affairs. This means some of the loan amount is going to be paid back to the outside lender if you are unable to make all the payments.
Overview: If you qualify for the VA loan, this is arguably the best type of loan you can get when purchasing your first home. Interestingly, you don’t even have to be a first-time homebuyer to utilize the VA loan. This loan is completely supported by the United States Department of Veterans Affairs so it can efficiently help active duty members and veterans purchase the homes that will help them take care of themselves and their families. Additionally, there are very flexible rules when it comes to the qualification process for this specific loan. There are plenty of different VA loan rates out there which allows you to find the best rates that suit your specific financial needs.
Pros & Cons: There are many attracting factors that are associated with this loan and that is why it is so strongly desired by many people. You can get up to 100% coverage for the entirety of your home’s value. Additionally, the closing costs that are associated with the VA loan are usually much less than those for the other conventional loans on the market. Although there are numerous benefits associated with this loan, there are a few deterrents that may make the process of receiving this loan a bit more tedious than the other conventional loans. The application process itself can be quite long and drawn out. This is because there are numerous forms of paperwork required to ensure you are an active duty military member or veteran. Also, you have to pay the VA funding fee that is associated with the VA loan. In the grand scheme, this funding fee is nothing compared to the amazing short term and long term benefits you will receive from being able to utilize this very flexible loan.
Summary: The VA loan is the best choice for veterans who don’t receive very much monthly income. Also, if you are an active duty member that doesn’t have a lot of savings to your name, this loan may be a great choice for you to start out your home buying journey. You don’t want to make the dangerous mistake of using too much of your funds when you are purchasing your first home because this could lead to terrible long-term effects when you are ready to purchase your second or third home. You should take advantage of this loan because it is specifically made for military members, veterans, and surviving spouses so they can be adequately taken care of for their service to the nation. It is important that you understand how the VA loan works. You are not physically lent the money. The Department of Veteran Affairs insures your loan with the financial assistance provided by the outside lender. Either way, you are receiving the financial assistance you need to make your purchase as a first-time homebuyer in California.
About: The Department of Housing and Urban Development supports the Good Neighbor Next Door program. This program allows people with various community occupations to get HUD-owned homes at an affordable price. This loan is usually offered to people working as police officers, firefighters, EMTs, and teachers. The usual discount rate is about 50% which is a large amount considering these loans are for people who already receive lower incomes compared to other residents who live in California. If you choose to use this loan to purchase your new California home, the Department of Housing and Urban Development has a few specific requirements you need to fulfill first. The department requires you to sign a second mortgage and note for the exact amount of the discount. Although this is true, you don’t have to worry about making interest payments or paying for any other extraneous items.
Overview: This program was originally created to help provide a much-needed boost to the communities that were considered to be “revitalization areas” by the Department of Housing and Urban Development. These areas are located all around the world are in much need of financial assistance especially when it comes to purchasing houses for first time homebuyers. This government agency created the Good Neighbor Next Door Program to help support this initiative. These programs offer the recipients a large discount of 50% for the home they are trying to purchase. This program is focused on helping people who have low income jobs that are extremely beneficial and essential for any community. In order for you to pay the other half of the purchasing cost, you are allowed to get any mortgage you want. These mortgage options include the FHA, VA, or any other conventional mortgages of your choosing.
Pros & Cons: If you want to purchase a home that is located in a “revitalization area”, there are numerous benefits you can encounter when choosing to use the Good Neighbor Next Program. This program will make your first time homebuying journey a nice experience that doesn’t cause you to worry about too many financial burdens. With this program, you will receive a 50% discount off the total price of the home you are trying to purchase. Granted, you stay in sole possession of the home for at least three years. After your three years is up, you are eligible to sell the home while still keeping all the equity. Unfortunately, there are a few deterrents associated with this program as well. When using the Good Neighbor Next Program, you are not allowed to leave your new home for at least three years. This is perfectly fine for people who love the stability of staying in the same place for a while but if you love to move often, then this program may not be the right one for you. Also, most people aren’t eligible to utilize this program because they either don’t have the correct occupation to qualify or they don’t like in an area that is considered to be “revitalized”. You must be a firefighter, police officer, pre-K to 12th grade teacher, or an emergency medical technician to qualify for this program.
Summary: If you live in a single-family residence within the previously designated “revitalization areas”, you are eligible for the Good Neighbor Next Door Program loan. Once the properties are listed on the program website, they are available to be purchased for seven days. In order for you to utilize this loan, you need to ensure that this home is going to be considered your primary residence. You are not allowed to assume a co-borrower status if you want to use the Good Neighbor Next Door Program. If you want to participate in this program for the state of California, you need to check the specific listings that are associated with that state. You will go through a few necessary requirements to secure your interest in purchasing a specific home that is listed. Remember, you will be able to purchase these homes at a 50% discounted price while utilizing a different mortgage to pay the other portion of the price.
About: The CalHFA Energy Efficient Mortgage is a fixed-rate loan you can receive that lasts for 30 years. This loan was specifically created to help homeowners have an avenue to make improvements to their home that will be better for the environment long term. These renovations are considered to be more energy efficient. The CalHFA Energy Efficient Mortgage is paired with the Cal-EEM Grant to give you the best options for the financial assistance you need to make a successful first-time purchase. Fortunately, you don’t have to repay the Cal-EEM Grant when you utilize it to make these energy efficient improvements to your home. This loan is fully supported by the FHA so you don’t have to have an amazing credit score to be eligible to receive this loan. You can have a minimum credit score of 660 to qualify for this loan.
Overview: This loan is most widely used by people who want to make energy efficient renovations to their home. A great perk with this loan is that it can easily be combined with the School Teacher and Employee Assistance Program and the MyHome Assistance Program. This loan effectively combines the EEM Grant with the CalFHA FHA insured first mortgage. You don’t have to worry about repaying the Cal-EEM Grant if you stay in your home for at least three years. If you are able to stay within your location for this amount of time, you don’t have to pay back any of the loan. On the other hand, you don’t have to stay at your home for three years to still use this program to implement the energy efficient renovations into your home. If you decide to leave before the three years is up, you have to use a pro-rated basis to pay back the loan.
Pros & Cons: Clearly, there are various benefits to this loan that will come at no cost to you if you plan to stay at your residence for a minimum of three years. This Cal-EEM + Grant Program can be paired with other programs to accrue a value of up to 4% of the entire value of your first mortgage. These programs accept numerous applicants that have a low credit score. Also, you can easily combine this program with the School Teacher and Employee Assistance Program as well as the MyHome Assistance Program to receive the sufficient amount of financial assistance you need to make the proper renovations to your new home. Although this program seems quite beneficial, it is not useful at all to anyone who isn’t trying to make any energy efficient improvements to their current home. This means you can’t use this specific program as a means to purchase your new California home because the money can only go towards the home improvements you complete after your home as already been purchased. Also, you must live in a single-family residence or this program will not apply to you either.
Summary: The main purpose of this grant is to provide people an avenue to make energy efficient changes to their homes that will be better for the long-term scope of the environment. This is why you don’t have to have an amazing credit score and a high level of annual income to be eligible for this grant. This is the perfect program for first time homebuyers who want to create an energy efficient home for themselves in California. You don’t have to have a great line of credit to be eligible so if these home improvements are something you’ve been considering for a while, you should go ahead and apply for this program. You won’t regret the ability to utilize the money gained from this grant without having to worry about paying it all back in the short term or long-term future.
Making the decision to purchase your first home in the beautiful state of California can bring on a large variety of emotions and hardships. Most of these hardships are associated with the financial burden you now have to bear from purchasing a new home. A decent portion of the loans available for first time home buyers are CalHFA loans. These loans are supported by the California Housing Finance Agency. It was originally established in the year 1975 to provide more affordable options for people trying to purchase homes in California for the very first time. Through this agency, you won’t receive physical money. The main goal of this agency is to put you in contact with the third-party lenders who are going to want to lend you money to purchase your home.
There is a succinct list of general requirements you need to fulfill in order to be eligible for these loans within the state of California.
1. Qualified as a First Time Homebuyer. You must be considered a “first time homebuyer” to qualify for any of these loans. This doesn’t necessarily mean you’ve never owned a home before. This just means that you have either never owned a home before or you haven’t owned a home within the past three years.
2. Reasonable Credit Score. You need to have a decent credit score that proves you are somewhat responsible with your money. No third-party lenders are going to want to let you borrow money if they don’t think you are going to eventually pay it back. Your credit score is a great determinant for outside lenders to understand how you handle your current influx and outflow of money. You need to usually have a 660 minimum credit score to be eligible for these loans.
3. Learn from the Homebuyer Educational Course. There is a homebuyer educational course you have to take before you purchase your first home. This course is designed to provide you with all the information you need to know in order to make the most beneficial decision for you. There are a lot of financial nuances associated with purchasing a home. The one-on-one sessions provided in this course will give you the chance to make sure you understand the financial undertaking you are committing to when purchasing a home.
4. Annual Income and Debt-to-Income Ratio Values. When you are applying to receive these loans, your annual income can’t exceed a certain limit that is specified by CalHFA. These limits can vary depending on the area you want to purchase your home in. If your annual income exceeds the specified limits, you may not be eligible to receive a loan from CalHFA.
You also need to have a debt-to-income ratio that is considered acceptable when comparing the amount of income, you make to the amount of expenses you have. This ratio can’t be any higher than 43% for manual underwriting and 45% for underwriting that is completely automated. Even if you meet all of the above requirements, you must also be either a United States citizen, qualified alien, or permanent resident to be eligible for the CalHFA loan.