1st
Time Home Buyer Program – CALHFA
The CALHFA program is designed for people who do not exceed the maximum income qualifications and are buying their first home. They offer below market rates and qualified applicants can even go 100% financing! The CALHFA program takes out the bargaining and stress often associated with getting financing for a first time home buyer. Wouldn’t it be nice to spend more time on what home you want then on what rate you will get? The CALHFA program is regulated so the rates are set in stone. You can rest easy knowing that the terms of your home loan won’t magically change mid process or the rate jump up during “crunch” time of negotiations. Here are just a few of the details of the CALHFA loan process.
1) You must be a first time home buyer, meaning you can’t have had ownership interest on a home for the last 3 years. Some areas will allow for a non first time home buyers to use this program but restrictions do apply.
2)
You must have an annual household income that does not
exceed the income limits set by CALHFA,
to give you an example,
3) You must be living in the home you are buying for the life of the loan or until you decide to sell the home. You wouldn’t be able to rent the property at a later date; doing so would be a violation of the CALHFA loan terms.
4) You must meet the minimum credit profile for the program. A credit score of at least 620 median is required to qualify and collection accounts can not exceed $1000 in total or they would be required to be paid off.
5) You must meet the allowable Debt to Income (DTI) ratio established for the program which can range from 45% to 55%. The DTI is a calculation of how much you spend on rent/mortgage, bills such as credit cards, car payment, etc (not food or utilities) compared to how much money you make gross (before taxes). To give you an example, if you alone make $7900 per month and your mortgage payment with taxes and insurance would be $4000 per month then your DTI would be 51%. As you add others to your household income then you can use more of it to qualify. Just keep in mind that each county has income limitations to qualify.
6)
You must be a citizen or other national of the
7) Unemployment insurance for the first 5 years which covers up to 6 months of mortgage payments in the event of a job loss outside of the borrowers control and only if the borrower would otherwise be eligible for unemployment benefits through EDD.
8) Loans exceeding 80% of the value of the property will require mortgage insurance. CALHFA offers mortgage insurance below industry rates
Factors for calculating mortgage insurance
|
LTV: |
Premium: |
|
90.01% - 95% |
.90% |
|
85.01% - 90% |
.67% |
|
80.01% - 85% |
.62% |
9) CALHFA can finance up to 102% in certain
High Cost Areas. Call for more details
The home you are buying must also meet certain requirements for type and price. Here are the requirements as set forth under the CALHFA guidelines:
1)
Priced at or below the limits established by CALHFA for new or existing homes. An
example using
2) Eligible properties include: A single family residence (detached) with a five acre maximum lot size, an attached unit (a half-plex that is not part of a planned unit development (PUD) or Condominium.), A detached unit within a PUD, A Condominium or attached unit in a PUD (lender restrictions may apply, project needs to meet CALHFA guidelines)
Now that we have taken a look at the requirements for this program we can shift our focus to some of the exciting benefits this program offers.
1) Although the rates for this program are set, there is a great feature of this program that allows for a temporary rate decrease. The CALHFA program allows for Temporary Buy downs. The 1-0. 2-1 and 3-2-1 buy downs are allowed for the 30 and 40 year fixed rate programs. On a 40 yr term at 7.000% you could qualify for as low as a 4.000% interest rate for the 1st year. On a loan of $550,000 it could mean a payment savings of over $1000 per month.
2) Another great feature of the program is the removal of the need to shop around for a decent rate. CALHFA has eliminated the need due to its set rates by program and income. Below is a chart showing the rates as of 4-22-08
|
|
Interest Rate1 |
|
FIRST MORTGAGE FIXED RATE LOAN PROGRAMS |
|
|
35 Year Fixed Mortgage |
|
|
interest only PLUSSM (loan amounts of $450,000 or less) |
7.000% |
|
interest only PLUSSM (loan amounts in excess of $450,000) |
7.375% |
|
|
|
|
40 Year Fixed Mortgage |
7.125% |
|
Self-Help Builder Assistance Program (SHBAP)3 - Low Income Only |
3.250% |
|
|
|
|
30 Year Fixed Mortgage |
|
|
Moderate Income |
7.000% |
|
Low Income2 |
6.500% |
|
|
|
|
Nonprofits3 & Affordable Housing Partnership Program (AHPP) - Low Income Only |
6.500% |
|
Extra Credit Teacher Program (ECTP) |
6.500% |
|
HomeChoice Program |
4.000% |
|
Self-Help Builder Assistance Program (SHBAP)3 - Low Income Only |
3.000% |
|
|
|
|
DOWN PAYMENT ASSISTANCE PROGRAMS |
|
|
Term matches term of first mortgage |
|
|
High Cost Area Home Purchase Assistance Program (HiCAP)4 |
7.000% |
|
CalHFA Housing Assistance Program (CHAP)5 |
7.000% |
|
|
3.250% |
|
Extra Credit Teacher Program (ECTP) |
5.250% |
CALHFA also has other programs to offer besides the basics. They offer a few special programs to further enhance their already great program. Here are a few of the programs they offer:
1) Affordable Housing
Partnership Program (AHPP) - CalHFA
partners with over 300 localities (cities, counties, housing authorities, nonprofit
entities, and redevelopment agencies) to offer the AHPP. This program is
intended for low income first-time homebuyers who meet specified income limits
and who are purchasing a new or existing home anywhere in
2) CalHFA Housing Assistance Program (CHAP) - The CHAP provides a deferred-payment junior loan – up to 2% of the purchase price, or appraised value, whichever is less – to qualified borrowers to be used for their down payment.
3)
4) Extra Credit Teacher Home Purchase Program (ECTP) - The ECTP provides a deferred-payment junior loan, for down payment assistance – from $7,500 to $15,000, depending on the location of the property, or 3% of the purchase price, whichever is greater. This junior loan is only available when combined with a CalHFA first mortgage loan. If the first mortgage loan is CalHFA’s 30-Year Fixed Mortgage, the interest rate on the first mortgage will be at a special reduced rate. Interest on the junior loan is deferred and may be reduced to zero if the borrower meets continued eligibility requirements. The ECTP can not be combined with the California Homebuyer’s Down payment Assistance Program (CHDAP).
5) High Cost Area Purchase Assistance Program (HiCAP)- The HiCAP provides a deferred-payment second loan of 4% of sales price or appraised value, whichever is less, to be used for down payment assistance and is only available when combined with a CalHFA first mortgage loan program. Property must be located in Alameda, Contra Costa, Los Angeles (except Palmdale/Lancaster Areas) Marin, Monterey, Napa, Orange, San Benito, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Cruz, Solano, Sonoma, and Ventura counties.
6) School Facility Fee Down Payment Assistance Program (SFF) - The SFF program provides qualified homebuyers with a partial or full rebate of the school facility fees paid by the home builder. While the amount varies according to school district and square footage of the home, the average rebate is approximately $4,700*. The assistance is in the form of a conditional grant, not a loan. If the buyer occupies their home for five years, the full amount of the grant is forgiven. If the home is owner-occupied less than five years, the grant must be repaid on a pro rata basis. Borrowers must complete a separate SFF application during their loan application process.
The CALHFA program gives you the freedom of knowing that you can spend more time on what you buy and where you buy and less time on how you’re going to buy it. It allows customer service to once again be a factor on your decision for who you deal with regarding financing. The CALHFA program is a great way to buy your first home. Call us here at Excalibur Mortgage and allow us to make your first time at home buying a Legendary One.
Mel Samick
Excalibur Mortgage
714-891-0266 Ext. 227
www.excaliburmortgage.com