First-Time Homebuyer Assistance Program Details

Summary:

These sources introduce the CalHFA MyHome Down Payment Assistance program, detailing its features like offering up to 3.5% of the purchase price to help first-time homebuyers cover down payment and/or closing costs. The program is a deferred payment loan with no monthly payments and a simple interest rate of 1% per year, payable upon the home’s sale, refinance, or the end of the loan term. It requires a minimum 640 credit score, is for owner-occupied properties, has income limits based on county, and can be paired with various first mortgage types like conventional, FHA, VA, and USDA loans. The sources also include a case study illustrating a home purchase scenario using the program and comparing it to a standard 20% down payment.

Visualization:
Explore visual by clicking on each bar

Main Theme and key Findings:

Expand each topic to read more

Key Points:

Down Payment and Closing Cost Assistance: Both MyHome and Access programs provide financial assistance that can be used for either down payment, closing costs, or a combination of both.
First-Time Homebuyer Focus: These programs are specifically targeted at individuals purchasing their first home.
Deferred Payment with Simple Interest: The DPA loans are structured as subordinate loans with deferred repayment. Repayment is typically triggered by an “exit event” and accrues simple interest.
No Equity Sharing: A significant feature is that these programs do not involve equity sharing, allowing borrowers to retain full home appreciation.
Layering of Programs: The MyHome and Access programs can be combined to provide a more substantial amount of assistance.
Integration with Primary Loans: The DPA programs are used in conjunction with conventional, FHA, VA, or USDA first mortgages.

Most Important Ideas and Facts:

Amount of Assistance: Provides up to 3.5% of the purchase price.
Usage: Can be used for the entire down payment, a combination of down payment and closing costs, or solely for closing costs.
Repayment: A deferred payment, simple interest subordinate loan. Repayment is due upon sale of the home, refinance, or at the end of the 30-year loan term.
Interest Rate: Accrues at a rate of 1% simple interest per annum.
No Monthly Payments: Borrowers do not have to make monthly payments on the MyHome loan.
- Eligibility:Must be a first-time homebuyer.
- Minimum 640 credit score required.
- Debt-to-Income ratios can go up to 50% based on credit scores.
- For owner-occupied properties only.
- Loan limits must be below high-balance county limits.
- Income limits apply based on the county of purchase and combined borrower income (not household income). Preferential interest rates and reduced mortgage insurance are available for borrowers with income less than 80% of the area median income.
- Applicable to one-unit properties (condos, townhomes, and PUDs).
Can be Combined With: Conventional, FHA, VA, or USDA first mortgages. Can also be combined with the CalHFA ZIP program (up to 3% of the first mortgage loan amount for closing costs) and temporary buy downs.
CalHFA Access Program:
- Amount of Assistance: Provides up to 2.5% of the loan amount.
- Layering with MyHome: When layered with MyHome, the total assistance is almost 5.5% for conventional loans and 6% for FHA loans, applicable to down payment and/or closing costs.
- Required Combination: Must be combined with MyHome and either CalPLUS Access FHA or CalPLUS Access Conventional.
- Repayment: No monthly payment. Charges 1% simple interest per annum due at an exit event (refinance, sale, end of loan term).
- No Equity Sharing: Similar to MyHome, there is no equity sharing.
Key Program Mechanics and Benefits:
- Deferred Payment, Simple Interest: The structure of the DPA loans significantly reduces the initial out-of-pocket costs for homebuyers and avoids the burden of an additional monthly payment. The simple interest calculation is also favorable compared to compounded interest.
- Case Study Example (Sacramento County): A hypothetical scenario is presented for a first-time homebuyer purchasing a $700,000 single-family home in Sacramento County using the MyHome program.
- Initial Purchase: The MyHome program provided the full 3% ($21,000) for the down payment. With seller credits covering a portion of closing costs, the borrower’s cash to close was estimated to be $5,000 – $7,000. Mortgage insurance is required due to the low down payment (97% LTV).
- Temporary Buydown: Utilizing a 2-1 temporary buydown funded by seller credits ($15,000) resulted in lower initial monthly payments ($4,700 in year 1, $5,100 in year 2) compared to the standard payment with the DPA ($5,590).
- Refinance Scenario (After 3 Years): With home value appreciation and principal reduction, the loan amount decreased. Refinancing after 3 years to a lower interest rate (5.75% assumed) while incorporating the MyHome payoff ($21,000 principal + $630 interest) into the new loan resulted in a significantly lower monthly payment ($4,850), comparable to the initial payments with the temporary buydown and the hypothetical 20% down payment scenario. The MyHome loan is paid back through the accumulated equity and included in the new loan amount.
- Sale Scenario (After 3 Years): Upon selling the home for $800,000 after 3 years, the homeowner receives proceeds that include the principal payments made and the appreciation net of the MyHome payback ($21,000 principal + $630 interest). In the example, the homeowner proceeds were estimated at $121,000 (before transaction costs).
Seamless Underwriting: The application process for the primary loan and DPA is integrated and does not significantly extend the closing time.
No Additional Pricing Hits for Lower Credit Scores: The programs do not penalize borrowers with lower credit scores with higher pricing on the DPA.
Ability to Layer Funds: Borrowers can contribute their own funds in addition to the DPA, potentially reducing the loan-to-value and avoiding mortgage insurance on conventional loans if the combined down payment reaches 20%.

Question and Answer:

What is the primary purpose of the CalHFA MyHome Down Payment Assistance Program?

The primary purpose of the CalHFA MyHome program is to cover the full down payment portion for eligible first-time homebuyers.

What is the maximum percentage of the purchase price that the MyHome program can provide as down payment assistance?

The MyHome program can provide up to 3.5% of the purchase price as down payment assistance.

What types of first mortgages can be combined with the CalHFA MyHome program?

The MyHome program can be combined with Conventional, FHA, VA, or USDA first mortgage loans.

Does the MyHome program require monthly payments for the down payment assistance portion?

No, the MyHome program is a deferred payment loan and does not require monthly payments for the down payment assistance.

When is the MyHome loan typically repaid?

The MyHome loan is repayable at the end of 30 years, at the time of sale of the home, or when the home is refinanced.

What is the interest rate charged on the MyHome loan?

The MyHome loan charges 1% simple interest per annum.

What is the minimum credit score required to be eligible for the MyHome program?

A minimum credit score of 640 is required for eligibility for the MyHome program.

Can the funds from the MyHome program be used for both down payment and closing costs?

Yes, the funds from the MyHome program can be used to pay for the entire down payment, a combination of closing costs and down payment, or just closing costs.

How are income limits determined for eligibility in the MyHome program?

Income limits for the MyHome program are based on the county where the property is being purchased and the combined income of the borrowers on the loan, not the total household income.

What is the additional program mentioned that can provide up to 3% of the first mortgage loan amount to help with closing costs?

The CalHFA 0 Interest Program (ZIP) can be added to provide up to 3% of the first mortgage loan amount for closing costs.

FAQs

What is the CalHFA MyHome Down Payment Assistance Program?

The CalHFA MyHome Down Payment Assistance Program is a deferred payment, simple interest subordinate loan designed to help first-time homebuyers in California cover the down payment and/or closing costs associated with purchasing a home. It is part of the California Housing Finance Agency (CalHFA) programs.

How much assistance does the MyHome program provide?

The MyHome program can provide up to 3.5% of the purchase price as down payment assistance. This assistance can be used to cover the full down payment portion or a combination of closing costs and down payment.

Can the MyHome program be combined with other assistance programs?

Yes, the MyHome program can be layered with other programs. For instance, combining it with the My Access program can provide almost 5.5% in down payment assistance for conventional loans and 6% for FHA loans. It can also be combined with the CalHFA 0% Interest Program (ZIP) which provides up to 3% of the first mortgage loan amount to help pay for closing costs.

When is the MyHome loan repaid and what are the terms?

The MyHome loan is a deferred payment loan, meaning there are no monthly payments. Repayment of the principal amount plus 1% simple interest per year is due at an “exit event,” which includes the sale of the home, refinancing the primary mortgage, or the end of the loan term (typically 30 years). The interest is calculated as 1% of the original principal amount annually.

Who is eligible for the MyHome program?

Eligibility for the MyHome program is primarily for first-time homebuyers. This generally means borrowers who have not owned a principal residence or resided in a home owned by a spouse during the previous 3 years. Even if you owned a rental property but haven’t lived in it for the last 3 years, you may still be considered a first-time homebuyer. Other eligibility criteria include a minimum 640 credit score, meeting income limits based on the county of purchase, the property being owner-occupied, and the first mortgage loan amount being below high balance county limits. The program is for one-unit properties, including condos, townhomes, and PUDs.

Can borrowers bring in their own funds along with the MyHome assistance?

Yes, borrowers can bring in additional funds along with the down payment assistance. This can be beneficial, for example, in a conventional loan to potentially avoid mortgage insurance if the combined down payment reaches 20% (17% from the borrower and 3% from the DPA).

How does the application process work for the MyHome program?

The application process for the MyHome program is integrated with the primary mortgage application. You make one application that covers both the primary loan and the down payment assistance. The underwriting is seamless, and these loans can typically close within a standard 30-day timeframe.

What happens to the MyHome loan if I refinance or sell the home?

If you refinance or sell the home, the MyHome loan will need to be repaid. The repayment amount will be the original principal borrowed plus the accumulated simple interest (1% per year) up to the time of the exit event. In a refinance scenario, the repayment can often be rolled into the new loan amount, avoiding the need for the borrower to bring cash to the closing table. If you sell the home, the repayment is taken from the sale proceeds. The program does not involve equity sharing, meaning any appreciation in the home’s value belongs entirely to the borrower.

Glossary:

CalHFA MyHome Down Payment Assistance Program: A program designed to provide down payment assistance to eligible first-time homebuyers in California, typically as a deferred payment, simple interest subordinate loan.
Deferred Payment Loan: A loan where principal and interest payments are postponed until a future event, such as the sale or refinance of the property, or the end of the loan term.
Simple Interest: Interest calculated only on the principal amount of a loan, not on any accrued interest.
Subordinate Loan: A loan that is junior to another loan (the first mortgage) in terms of repayment priority. In the event of a foreclosure, the first mortgage is paid off before the subordinate loan.
Exit Event: Circumstances that trigger the repayment of the MyHome loan, such as the sale of the home, refinancing the first mortgage, or the end of the loan term.
First-Time Homebuyer: An individual who has not owned and occupied a principal residence, or resided in a home owned by a spouse, during the previous three years.
Loan-to-Value (LTV): A financial ratio used by lenders to assess lending risk. It is calculated by dividing the amount of the mortgage by the appraised value of the property.
Debt-to-Income (DTI): A percentage that compares a borrower’s total monthly debt payments to their gross monthly income. It is used by lenders to assess a borrower’s ability to manage monthly payments and repay debts.
Temporary Buydown: A financing technique where funds (often from the seller) are used to temporarily reduce the buyer’s interest rate and monthly payments for the first few years of the loan.
Seller Credits: Funds provided by the seller of a property to the buyer to help cover closing costs or other expenses associated with the purchase.
Mortgage Insurance: An insurance policy that protects the lender in case the borrower defaults on their mortgage payments. It is typically required when a borrower makes a down payment of less than 20% of the home’s purchase price.
CalHFA Access Program: Another CalHFA program that can be layered with the MyHome program to provide additional down payment and/or closing cost assistance.
CalPLUS Access: CalHFA first mortgage programs (either FHA or Conventional) that must be combined with the CalHFA Access program.
CalHFA 0 Interest Program (ZIP): A program that provides a zero-interest subordinate loan to help cover closing costs, which can be combined with the MyHome program.
Owner Occupied Properties: Properties that the borrower will live in as their primary residence.
Income Limits: Maximum income thresholds that borrowers must meet to be eligible for certain loan programs, such as the CalHFA MyHome program. These limits are often based on Area Median Income (AMI).
Loan Limits: The maximum loan amounts that lenders will provide for certain types of mortgages, often based on guidelines from entities like Fannie Mae and Freddie Mac.
Soft Credit Check: A type of credit inquiry that does not negatively impact your credit score. It is often used for pre-qualification or to assess eligibility for programs without a formal application.
NMLS ID: A unique identifier assigned to mortgage loan originators and companies by the Nationwide Multistate Licensing System & Registry.

Cast Of Characters:

CalHFA: The California Housing Finance Agency, which offers the MyHome and Access down payment assistance programs. These are government programs aimed at assisting first-time homebuyers.
Shining Star Funding (A division of American Pacific Mortgage Corporation): The mortgage company that facilitates access to the CalHFA MyHome and Access programs and provides information about these programs. Deo, an employee of Shining Star Funding, is mentioned as presenting information on the MyHome program.
First-Time Homebuyer (Case Study Borrower): A hypothetical individual or couple who is purchasing a single-family home in Sacramento County and utilizing the CalHFA MyHome down payment assistance program. Their financial journey through purchase, potential refinance, and sale is used as an example.
Seller: The individual or entity selling the home to the first-time homebuyer in the case study. The seller provides credits towards closing costs and temporary buydowns.
Fannie Mae and Freddie Mac: Government-sponsored enterprises whose conforming and high balance loan limits are used to determine the loan limits for the first mortgage in conjunction with the MyHome program.
OBMMI™: The entity or system that powers the updated rate indices displayed in the sources.

Podcast:

Our Loan Programs
Video Resources

Agent Branded Website
View Example
Get Your Branded Site

First-Time Homebuyer Assistance Program Details

Recent Posts