First-time homebuyer’s are those defined as Not owning a home the past 3 years.
The niches for 1st time home-buyer’s is resources through local and State organizations to fund down payment assistance, shared apprecition and mortgage credit certificate programs. Not for all, yet very strong tools. The assistance programs all have minimum credit scores (some as low as 620 credit), gross income limits (depending upon size of family), and sales price limits.
Down payment assistance programs are in two flavors. Standard Down Payment Assistance (DPA) and Shared Appreciation (SAM).
DPA: Generally up to 3 % of the loan amount provided towards the down payment requirements of the first loans down payment. FHA requires 3 1/2 %, FNMA requires 3 %. The DPA loans are no payment, simple interest, 3 % rate. Due to be paid back if you refinance, sell or payoff the original 1st mortgage, or 30 years. California Housing is one such provider. Visit http://www.calhfa.ca.gov/homebuyer/programs/index.htm for more information about this and the MCC program described below.
MCC program. A Federally funded program. Many counties administer this program, yet the California Housing and Finance Authority has stepped up to provide this incredible program Statewide. Both in areas without the County administration, and to those Counties with the local administration that may be out of funds. For this program, a conversation with your tax preparer is highly recommended. I do not provide tax planning. The program in a nut-shell shifts 15 – 20 % of your home mortgage interest deduction from a deduction to a tax credit. This alone can help you purchase more home for the same after-tax adjusted payment. Again, not something you want to figure out on your own. This is a tool that should require a licensed tax preparer to let you use. It is not required by the government, just the level of my recommendation.
That said, both programs are FANTASTIC to use. We work with Realtor partners across the State who welcome home-buyers utilizing these programs. I say this as many are not accustomed to the programs, nor skilled in negotiating contracts where we are educating many listing agents as well.
Share Appreciation (SAM) is where the local government is your partner in the home. They provide a much larger down payment, in some cases up to 20 % of the purchase price. Affording you lower payments or a larger home. In return you will share with the local government some of the profit when you sell your home in the years to come. Many different specifics, some grant programs, some will forgive the debt. Each County that offers these programs has specific rules we will abide by. This page is not the sum total and does not attempt to be. I work with you to find the programs, and determine how you might best use them.