Advice for First-Time Homebuyers in California

The California real estate market is booming. With escalating prices, buying your first home may appear doubtful; however,�¯�¿�½special loans available for first-time homebuyers can turn hope of ownership into a permanent address.

Qualifying
Qualifying for special first-time homebuyer loans is based on several factors, which may vary according to the type of program. The one prerequisiteÃ?¯Ã?¿Ã?½to all programs offered only to first-time buyers is its definition. Lenders define first-time home ownership as the buyer “not owning a home for the last three years prior to the intended purchase.” Other qualifications may include:Ã?¯Ã?¿Ã?½

âÂ?¢ Income restrictions based on family size – many first-time buyer loans have maximum income limits.
âÂ?¢ Property location – some programs identify specific funding areas where the home must be located. Property price restrictions may also apply.
âÂ?¢ FICO score qualifications – all lenders consider credit scores (determined by repayment history) but the minimum score allowed varies by program. Your lender will request a credit report for you upon application for the loan.
âÂ?¢ Employment —generally, lenders like to see two years steady employment in the same field, and at least one year with the same employer;Ã?¯Ã?¿Ã?½however this requirement varies by program. Self-employed applicants will be qualified using their past two year’s tax returns.
âÂ?¢ Down Payment —this requirement varies by program. The good news is that some loans require no down payment, while others call for a small amount down.
âÂ?¢ Sweat Equity —you might qualify for a first-time homebuyer loan where helping in the construction or rehabilitation of your moderate single family residence is mandatory.

Loan Types for First-time Homebuyers

âÂ?¢ HUD Programs —the US Department of Housing and Urban Development works through local governments (state, city, county) to make financial assistance and counseling available for first-time homebuyers. Some of these loan programs include:
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The American Dream Down Payment Initiative —ADDI will provide down payment, closing costs, and rehabilitation assistance to eligible individuals. The amount of ADDI assistance has limitations. All 50 states are eligible for funds. For more information log on to: http://www.hud.gov/offices/cpd/affordablehousing/programs/home/addi/index.cfm

Local Programs sponsored by State governments – will assist a first-time homebuyer’s purchase by working with local lenders to extend low interest loans or down payment assistance. Here is a web address with a list of states offering funding for these programs: http://www.hud.gov/buying/localbuying.cfm

Housing Choice Vouchers – allow very low-income families to choose and lease or purchase safe, decent, and affordable privately-owned rental housing. For more information on qualifying for vouchers and their uses, visit this address: http://www.hud.gov/offices/pih/programs/hcv/index.cfm

Other Loan Programs Helpful to First-Time Buyers

âÂ?¢ VA —works with lenders to guarantee home loans to veterans requiring no down payment. For more information go to the Veteran Administration web site at: http://www.VA.gov/

âÂ?¢ FHA —Federal Housing Administration is managed by HUD and works with lenders to provide insured loan products not limited to first-time buyers. FHA is known for flexible qualifying requirements and a variety of low down programs.

âÂ?¢ Fannie Mae —provides programs in partnership with lenders offering affordable housing options. For more information: http://www.fanniemae.com/index.jhtml

âÂ?¢ Freddie Mac —like Fannie Mae, provides programs in partnership with lenders offering affordable housing options. Freddie Mac offers options for down payment assistance with its “Affordable Gold” products. For more information visit: http://www.freddiemac.com/sell/expmkts/affprod.html

Links to�¯�¿�½Programs for California First-Time Homebuyers

� http://www.calhfa.ca.gov/
For down payment and closing cost assistance.

� http://www.habitat.org/local/affiliate.asp?zip=&place=91
Habitat for Humanity – through volunteer labor (including homebuyer’s), builds and rehabilitates houses for families in need.

� http://www.rurdev.usda.gov/ca/programs.htm
US Department of Agriculture Rural Housing – homebuyer programs for rural communities.

� http://www.hcd.ca.gov/
State of California Housing and Community Development

By using the information links provided, first-time homebuyers will know which programs to discuss with a mortgage lender. Lenders are busy and if not asked about a special program, they may overlook talking about it. Don’t be afraid to ask questions.

It looks like home values will keep soaring in California, so the sooner you can become a first-time homebuyer, the faster your equity will also soar.�¯�¿�½Keep looking for updates to�¯�¿�½these site resources as new lending programs are frequently added.�¯�¿�½