Navigating First Time Buyer Programs
When it comes to First-Time Buyer and Down Payment Assistance programs it is easy to get lost in all the available programs. Here in Sacramento county not only are there local city and county programs but there are also state programs and lender specific programs.
I recommend starting with the state programs and then check the county, city and lender specific programs. The state of California has a pretty straightforward website that goes over the details of their programs. Their website is www.calhfa.ca.gov. Once there one can look under the Homebuyers section for Available Loan Programs and not only find the standard loans that they offer but also the Down Payment Assistance programs. The most popular program that the offer is the MyHome program that provides :
"a deferred-payment junior loan – up to 3.5% of the purchase price, or appraised value, whichever is less, to be used for their down payment and/or closing costs. This program must be combined with a CalHFA first mortgage loan."
They also have a program for school teachers, admins, and school district employs that provides:
"a deferred-payment junior loan of an amount not to exceed the greater of $7,500 or 3.5% of the sales price or in CalHFA-defined high cost areas an amount not to exceed the greater of $15,000 or 3.5% of the sales price. Assistance can be used for down payment and/or closing costs."
Moving down to the Sacramento county level there is the Sacramento Mortgage Credit Certificate (MCC) Program. This program differs in that it is not a down payment assistance program but it provides a tax credit thus giving more available income to qualify for a higher loan amount. Here are some of the details pertaining to that program:
20% Mortgage Credit Certificate – a tax credit of 20% of the annual mortgage interest paid (amount of the credit cannot be more than the annual federal income tax liability after all other credits and deductions have been taken into account)
MCC will be in effect for the life of the original mortgage loan provided property remains owner occupied
MCC may be reissued one time, upon the first refinance of the original mortgage loan
MCCs may be used with conventional loans, fixed-rate or adjustable loans, FHA and VA loans (MCCs are not available with bond-backed loans such as CHFA or Cal-Vet)
40 percent of an MCC allocation is reserved for households whose income does not exceed 80 percent of the area median adjusted for family size
Currently right now the City of Sacramento's CalHome program is out of funds but you can keep track of their funding status HERE.
Last we have the lender programs. Just about every lender has their own version of Down Payment Assistance programs. From big banks, credit unions to local mortgage lenders. There are programs available for FHA loans, Conventional loans and Jumbo loans. When applying for a mortgage it's best to talk to a few different lenders to see what programs they have available to fit your needs.
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