California state officials launched a new program in April that allows first-time home buyers to borrow a down payment at a 0% interest rate.
The program, the Reimbursable equity loanoffers forgivable loans to homebuyers up to 10% of the purchase price of the home.
“We must use every tool in our toolbox to tackle the housing affordability crisis head-on,” Gov. Gavin Newsom said in an April. statement announcement of the program.
And the biggest advantage? If the buyer stays in the home for five years, they won’t have to repay the junior loan, according to the California Housing Finance Agency.
Borrowers, however, may have to repay part of the loan if they stay in the home for less than five years, officials said.
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The loan has a 0% interest rate, according to the California Housing Finance Agency.
“CalHFA first mortgage interest rates will vary based on your financial situation, lender fees and other factors. Interest rates may also change daily. We recommend that you check with a Privileged Loan Officer receive a precise estimate for this program”, the Housing Finance Agency website states.
State officials said the program’s goal is to give first-time home buyers a head start with immediate equity, which will help Californians build and pass on intergenerational wealth.
The aid comes as median California home prices hit new highs and interest rates hit their highest levels in more than two years.
According to California Association of Realtors.
“Owning a home represents belonging, stability and has long been recognized as one of the best ways to build wealth, but for far too many Californians, the dream of owning a home simply remains out of reach,” mentioned Secretary of the Agency for Business, Consumer Services and Housing Lourdes Castro Ramírez.
The loan is available to Californians whose income is less than 80% of the area median income in the county where the property is located.
This means that the income limit will be different depending on where people want to buy a house.
So, for example, a family in Sacramento can earn up to $72,700 and qualify for the loan, while in Santa Clara County the limit is $118,960.
In Los Angeles County, people wouldn’t need to earn more than $68,880 to qualify for the program, according to the Fannie Mae Search Tool.
The loan can be used for down payment or closing costs, officials said.
Other Borrower Requirements
- Be a first-time buyer
- Use the property as a principal residence
- Complete homebuyer education counseling and earn a certificate of completion through an eligible homebuyer counseling organization.
Do you have any requirements for the type of home you need a loan for?
It must be a single-unit, single-family residence. (This includes approved condominiums/PUDs.)
How to register
Families who think they are eligible and wish to apply can click on Find a loan officer and contact one in your area.
When you contact the loan officer, you will need these documents at hand to answer the questions:
- Bank statements
- Employment history
- Previous tax returns
You will find more information about the program here.