First time home buyers in California can now tap into a new program to assist with a 20% down payment loan.
The CalHFA Dream For All program allows a lender to provide up to 20% for a down payment on a home, letting the homebuyer avoid PMI and other fees associated with a low down payment loan.
How does it work?
The home buyer will have a mortgage of 80% of the asking price, and a second lien of 20% of the purchase price.
The second lien is paid back when the home owner sells or refinances the home at later date (Good news! The payback is with 0% interest!) You will also owe 20% of the appreciation on the home at the time of sale.
To qualify, the home buyer must be classified as a first time home buyer, (meaning the buyer has not owned a home in the past three years), be the main occupier of the home, and not exceed specific income limits. Successful completion of an eight-hour home buyer course is also required.
If you’re interested, you should contact a CalHFA approved lender asap, or contact an experienced real estate agent, who can put you in contact with a lender . The program is funded with $300 million in state funds to start, and chances are good it will go fast.
For more info on the CalHFA Dream For All program, click here, and here.