California launched a profitable program for those who buy housing for the first time - ForumDaily
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California has launched a profitable program for first-time homebuyers

California officials launched a new New California program in April that allows first-time homebuyers to make a zero-interest down payment. KTLA.

Photo: Shutterstock

The Forgivable Equity Builder Loan program provides homebuyers with soft loans up to 10% of the purchase price of a home.

"We must use all of the tools in our toolbox to tackle the housing affordability crisis," Gov. Gavin Newsom said in an April statement announcing the program.

And the biggest plus? If a homebuyer stays in a home for five years, they won't have to pay off a junior loan, according to the California Housing Finance Agency. That is, program participants will be able to borrow up to 10% of the purchase price of the house and receive debt forgiveness after five years of living in the purchased property.

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A loan that can be forgiven to the borrower allows the buyer to increase their capital faster and refinance the loan at a lower interest rate. But this can be done only after five years of ownership of real estate.

Borrowers may have to repay part of the loan if they stay in the home for less than five years, officials said.

According to the California Housing Finance Agency, the interest rate on the loan is 0%.

“Interest rates on a first CalHFA mortgage will vary depending on your financial situation, lender fees and other factors. Interest rates can also change daily. We recommend that you contact a preferred loan specialist to obtain an accurate rate for this program,” the Home Finance Agency website says.

State officials said the goal of the program is to give first-time homebuyers a head start with immediate capital, which will help Californians accumulate and pass on wealth from generation to generation.

Help comes as average California home prices soar to new highs and interest rates hit their highest level in more than two years.

According to the California Association of Realtors, only 24% of California households could afford to purchase a house at an average price of $797 in the first quarter of 000, up from 2022% in the first quarter of 27.

“Home ownership represents belonging, stability, and has long been recognized as one of the best ways to create wealth, but for too many Californians, the dream of owning a home remains out of reach,” said Lourdes Castro Ramirez, secretary of the Business, Consumer Services and Housing Agency.

Program loans are available to Californians earning less than 80% of the county's median annual income.

This means that the income limit will be different depending on where people want to buy a house.

For example, a Sacramento family can earn up to $72 and qualify for a loan, while Santa Clara County has a $700 limit.

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According to the Fannie Mae Lookup Tool, in Los Angeles County, people must earn no more than $68 to qualify for the program.

The loan could be used for a down payment or closing expenses, officials said.

Other requirements for the borrower

  • First home buyers.
  • Use the property as your primary residence.
  • Complete a homebuyer education consultation and receive a certificate of completion through an appropriate homebuyer counseling organization.

Any requirements for the type of home you need a loan for?

  • It must be a single-family dwelling. (This includes approved condominiums/PUDs).

How to apply

Families who believe they are eligible and wish to apply may press “Find a loan officer” and contact one in your area.

When contacting a loan officer, you will need the following documents to answer your questions:

  • Pay receipts.
  • Bank statements.
  • Employment history.
  • Previous tax returns.

More information about the program can be found here.

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