My Real Estate Blog

SACRAMENTO
September 7, 2010

The California Housing Finance Agency announced Tuesday the launch of a new fixed rate, 30-year FHA-insured mortgage to help low and moderate income California families purchase their first home.

The mortgage, done in partnership with the Federal Housing Administration, provides low and moderate income, first-time homebuyers access to mortgages with below market interest rates, affordable down payments and other benefits, the agency says.

“This new program will help open the door to first-time homeownership for many California families,” says Steven Spears, executive director of CalHFA. “With this program, CalHFA will return to being a significant provider of financing for first-time homebuyers and build on our 35-year track record on behalf of more than 155,000 California families.”

Mr. Spears says that while California real estate prices today are attractive for first-time homebuyers, many cannot meet the loan requirements that conventional lenders are imposing.

“With the disruption in the credit markets over the last two years, we have been limited in our ability to help finance home purchases. This new program offers California families another way to purchase their first home with reliable, fixed rate financing,” he says.

Under federal law, first-time homebuyers are defined as not having owned and occupied a home for the past three years. In addition to first-time homebuyers, qualified veterans under the Heroes Earnings Assistance and Relief Tax Act are also eligible.

The CalHFA FHA program includes upfront mortgage insurance. Borrowers are eligible to use the California Homebuyer’s Downpayment Assistance Program, which can provide up to 3 percent of the purchase price of the home for down payment or closing cost assistance.

Borrowers must meet a number of eligibility requirements to qualify for this CalHFA program including:

• CalHFA’s income limits, which vary by county and family size. For a family of four in Los Angeles County, for example, income must be less than $111,020 per year.

• Purchasing homes that are within FHA’s loan limits and CalHFA’s sales price limits. Mortgage loans are limited to $417,000 under FHA guidelines. CalHFA’s sales price limits vary by county.

• Meeting the minimum credit score requirements with maximum debt-to-income ratios.

• Completion of a HUD-approved homebuyer education program.

“California’s real estate market remains fragile as our state faces high unemployment and a continued disruption in housing prices,” says Mr. Spears. “This new, 30-year fixed rate FHA mortgage is one piece of a broader effort to address California’s housing needs.”