One program that is now available for these types of prospective buyers is CalPlus. CalPlus is an FHA-insured, 30-year fixed mortgage that includes a special zero interest junior loan for as much as 3.5% of the first mortgage loan amount to assist borrowers needing funds for a downpayment.
According to the Sacramento-based agency, the Zero Interest Program downpayment loan does not have to be repaid until the home is sold, refinanced or paid in full. It is only available as part of the CalPlus loan, the state agency added.
For example, a family taking out a $200,000 mortgage could receive up to $7,000 in downpayment assistance through the ZIP benefit of CalPlus.
Additionally, CalPlus can also be combined with other state programs, including the California Homebuyer’s Downpayment Assistance Program, which provides up to 3% of the purchase price or appraised value.
The CalPlus program can also be combined with a federal program that allows borrowers to offset part of their mortgage interest payments with credits on their federal income taxes. The Mortgage Credit Certificate Tax Credit may enable first time homebuyers to convert a portion of their annual mortgage interest into a direct dollar-for-dollar tax credit on their individual income tax returns.
“Since its inception, CalHFA has focused on helping Californians become homeowners, strengthening communities and neighborhoods,” said Claudia Cappio, executive director of the California Housing Finance Agency. “Downpayments continue to be one of today’s biggest obstacles for first time homebuyers. This new program is aimed at bridging the gap for California families.”
Besides CalPlus, the agency is offering a 30-year, FHA-insured mortgage and is also restarting its Extra Credit Teacher Program.
The ECTP provides up to a $15,000 deferred payment, subordinate loan for eligible teachers, administrators, classified employees and staff members working in high priority schools (which is first through fifth grade), county schools, or continuation schools throughout the state. Furthermore, the ECTP offers a conditional, forgivable interest feature.
Borrowers for these CalHFA programs are required to complete a financial education program and meet limits on income and sales prices. In Los Angeles County, the income limit for a family of four is $73,600, while in Sacramento County, a family of four could earn up to $86,350.
“Working with our partners CalHFA can help make homeownership a real and stable possibility for low and moderate income Californians,” Cappio added.