Owning a home is the American Dream, but it is a process that can be confusing, expensive, and can take a long time. One of the most common misunderstandings for first-time buyers is having to save for a costly downpayment.
Luckily, many first-time home buyers programs help you with that.
There are federal, State, and local programs that are available in most states, including California, that can aid in down payment assistance, assistance with closing costs, and tolerant credit requirements.
Moreover, these programs are easily accessible, and you can apply for these programs online or in person.
Before we discuss Brentwood, CA, first time home buyer programs, let’s define what qualifies a person(s) as a first time buyer:
Who qualifies as a first-time homebuyer?
- A person who has yet to own a principal residence for at least three years before purchasing a property qualifies as a first-time homebuyer.
- A single parent or spouse who owned a home with their previous spouse while married.
- A person who owned a house that wasn’t compliant with the state’s model building codes, e.g., a mobile home, is also eligible as a first-time homebuyer.
Now that you understand who qualifies let’s discuss 8- types of programs available to buyers in the Brentwood, CA area.
1. CalHFA FHA Loan Program:
The federal program that assists home buyers falls under the guidelines of the Federal Housing Administration, or FHA, which is part of the U.S. Department of Housing and Urban Development.
The California agency that administers these opportunities is known as CalHFA, and these agencies can make your dream of owning a California home come true regardless of whether you have a less-than-perfect credit score.
This type of loan program is fully guaranteed by both the state and federal agencies, making them popular among mortgage lenders, and an FHA loan is the most common among first-time home buyers. This is because they are more accessible than conventional loans.
While most traditional loans will ask for a down payment, it’s not always required. Just keep in mind that the lower the down payment, the more you’ll have to purchase mortgage insurance to qualify and keep the loan.
Requirements for an FHA loan:
- One must be a first-time buyer, i.e., one should have no homeownership for the last 3 years.
- One must have a credit score of 640, and people with no credit score are not permitted to apply.
- One must attend an approved home-buying counseling course and obtain a certificate as evidence.
- One must be a U.S. citizen and a permanent resident.
The following is needed to purchase a property using the CalFHA program:
- The property must be 5 acres or smaller.
- The property must be in California.
- The property should not exceed the county’s price limits.
- Land trusts, leaseholds, and coops are not allowed.
- An annual income of at least $139,000 is needed.
2. CalPLUS FHA Loan Program
The CalPLUS FHA loan Program is FHA-insured and has a fixed interest rate in installments with a maximum 30-year term. This should include a Zero Interest Program(ZIP) and a closing cost assistance program, known as GAP loans.
GAP loans (known as DAP in Brentwood) provide qualifying first-time buyers with additional funds for closing costs and other expenses that may occur with purchasing a home.
Requirements of Loan
- One must access the Zero Interest Program(ZIP)
- FHA-insured first mortgage.
- One must have a minimum 660 credit score for manual underwriting approvals.
- The borrower must have a minimum 640 credit score for automated underwriting approvals.
3. CalHFA VA Loan Program
VA loans are a type of loan that is insured by federal and state agencies and are available to veterans and active-duty service members. They provide qualifiers with a zero-down payment option and are fully guaranteed loans through private lenders, not the Department of Veterans Affairs, which makes VA loans.
Requirements to qualify for a VA loan
- You should have 90 or more consecutive days of active service during wartime or 181 days during peacetime.
- You are the spouse of a member who died or got disabled while serving.
4. CalHFA USDA program
For first time buyers in rural settings, there is an opportunity to explore loan programs under the USDA. This homeownership program offers loans and encourages people in small communities to own homes, and The United States Department of Agriculture’s Rural Development Program issues these loans.
In California, this program is administered as a part of the CalHFA program under USDA requirements.
Requirements for a USDA home loan
- The person eligible should live in a rural area.
- There is no minimum credit score, but you must show you can manage debt.
- One must meet the down payment, which sometimes can be zero.
USDA loans have the lowest rates, making them more convenient than conventional mortgages.
5. CalHFA Conventional Loan Program
While some first time buyer programs don’t require a down payment, a CalHFA Conventional Loan Program provides a fixed interest rate with a maximum 30-year term, but has a requirement of at least a 3% down payment.
There are additional requirements like having to take a homebuyer education course to qualify, but having the security of a fixed 30-year mortgage is a great option for first time buyers.
Requirements for a CalHFA Conventional Loan
- One must have a minimum 640 credit score.
- The borrower must be a first-time home buyer.
- The borrower must provide paperwork to show their pay history, tax returns, and bank statements for the last 24 months.
- First-time borrowers need to complete an 8-hour Homebuyer Education Course. This course can be done in person or online.
It’s good to know that to maintain your qualifications with CalHFA, there are income limits that need to be met every year.
6. Brentwood Down Payment Assistance Program
To aid with down payment and closing cost assistance, Brentwood, CA offers a program to provide small loans of a maximum of $10,000. This program is known as Down Payment Assistance Program (DAP) but has limited funds available, so one needs to apply early.
For Brentwood CA first time home buyers, there are some requirements to qualify for the loan. These requirements include:
- The home has to be within the city limits and cost below $600,000.
- The buyer should afford at least 3% of the price of the home they want to purchase.
- A first-time home buyer education course is mandatory, and one has to provide a certificate.
- It is good to note that one can only defer the house payments if the borrower vacates or if they meet the terms of the first mortgage.
7. CalPLUS Conventional Loan Program
CalPLUS Conventional Loan Program is a fixed interest rate loan with slightly higher interest rates than a traditional loan, spread over 30 years. It is combined with the Zero Interest Program to help with the down payment.
Requirements for a CalPLUS loan
- The borrower must have access to the ZIP.
- The purchase price should be around $ 600,000 to qualify.
- The individual uses the property as a primary residence.
- A homebuyer education counseling and the certificate obtained are essential.
- Condos must be Fannie Mae-approved.
Remember, you will need a minimum 620 credit score and a 20% down payment to void mortgage insurance.
8. Forgivable Equity Builder Loan
The California Housing Finance Agency(CalHFA) offers this loan program to help first-time homebuyers get equity in their home. Residents from California can borrow up to 10% of the original price of the house with a 0% interest rate. If you reside in the home for 5 years, the loan is forgivable making it an incredible option for first time buyers to receive assistance.
Requirements to qualify for the Forgivable Builder Loan
- The borrower must have a 660 minimum credit score.
- One has to be a first-time homebuyer.
- The borrower wants to purchase a one-unit residence.
- The borrower has to use the property as a primary residence.
For many people, buying and owning a home in California is scary and confusing, especially in a competitive market like what we have in California.
By understanding the opportunities available to Brentwood CA first time home buyers, you should have a better understanding of what options are available to you and how to qualify for a loan so that you can achieve a piece of the American Dream.
And to understand the market, you should be working with experienced, knowledgeable real estate pros like at Krista Homes.
Our experienced team will help guide and educate you about the different programs and recommend lenders that will help you select whichever program you’re eligible for.