Over the down-payment hurdle.
For many Southern California buyers the monthly payment is manageable and the down payment is the wall. State and local assistance programs can cover part of it, paired with the first mortgage that fits. Troy pairs them and explains how the assistance is repaid.
- Sources
- CalHFA, county and city programs, where available
- Structure
- Often a deferred-payment second loan for down payment or closing costs
- Paired with
- FHA, VA or conventional first mortgage
- Requirements
- Income limits, homebuyer education and primary residence, by program
How it works
Down payment assistance programs provide funds toward the down payment or closing costs on a primary residence. The most widely used in California come from the California Housing Finance Agency, which offers first mortgages and companion assistance loans, often structured as deferred-payment seconds with no monthly payment until the home is sold, refinanced or paid off.
Counties and cities also run programs from time to time, and some employers and occupations have their own. Availability, funding and terms change, so what exists this month may differ from last. Troy keeps track and tells you what is actually open.
Eligibility usually turns on household income against a county limit, a homebuyer education course, occupying the home as your primary residence and, for some programs, being a first-time buyer as the program defines it. The assistance is paired with an FHA, VA or conventional first mortgage.
- First-time buyers in Los Angeles and Orange County with income within program limits
- Buyers with steady income who have not yet saved a full down payment
- Buyers combining assistance with an FHA or conventional first mortgage
- Teachers, first responders and other buyers eligible for occupation-based programs
- Buyers who want to keep savings in reserve rather than spend them at closing
Not sure you fit? Ask. Troy tells people on the first call when a different program serves them better.
What to consider
Program details vary by investor and change over time. These are the questions that decide whether the loan is right for you; Troy confirms the specifics for your file.
Income limits
Most programs cap household income by county and household size. Limits change; Troy checks the current figure.
Repayment
Deferred assistance is repaid when you sell, refinance or pay off the first mortgage. Some programs charge simple interest; some share appreciation. Read the terms.
Homebuyer education
An approved course is usually required before closing. It can be done online and Troy points you to the right one.
Availability
Programs open and close with funding. If a program you read about is closed, Troy will tell you and find the alternative.
The process
From the first conversation to funding, you deal with Troy.
Check eligibility
Income, household size, first-time-buyer status and the property's location against the programs currently open.
Pair the first mortgage
FHA, VA or conventional, chosen for your credit and the program's rules.
Education and approval
Complete the homebuyer course while Troy underwrites both loans.
Close both loans
The first mortgage and the assistance loan close together, and the assistance funds go straight to escrow.
Questions people ask
General answers. The answer for your file comes from a conversation with Troy, not from a web page.
Is down payment assistance a grant or a loan?
Most California programs are loans, usually deferred seconds repaid when you sell, refinance or pay off the home. A few grants exist. Troy explains the repayment terms of each program before you commit.
Do I have to be a first-time buyer?
Many programs define a first-time buyer as someone who has not owned a home in the last three years, so prior ownership does not always disqualify you. Some programs have no first-time requirement.
Can assistance cover closing costs too?
Some programs allow assistance toward closing costs as well as the down payment. It depends on the program.
Does using assistance make my offer weaker?
A pre-approval that already accounts for the assistance is as strong as any other. Troy issues it that way, so the listing agent sees a complete, underwritten file.
Related programs
Often considered alongside this one. Troy prices the alternatives so you can see them side by side.
FHA loans
Lower down payments and flexible credit guidelines for purchases and refinances, insured by the Federal Housing Administration.
Home purchase
Conventional, FHA, VA, jumbo and down-payment assistance, with a pre-approval that has been underwritten before the letter goes out.
Conventional
Fannie Mae and Freddie Mac financing with agency pricing for documented income, including high-balance for Los Angeles County.
Non-traditional credit
A documented history of rent and bills paid on time can stand in for a credit score.
Talk it through with Troy.
No obligation and no credit pull on the first call. Tell him what you’re trying to do and he’ll tell you whether down-payment assistance financing is the right tool, and what it would cost.