In spite of doom and gloom push by many, there are many people that do want to buy a home. For most, the biggest challenge to buying a home in the greater Silicon Valley is finding the funds for a down payment. Even with FHA availability requiring only 3.5% down may not be an option for very many come September 2011 when loan limits are potentially reduced back to $417,000. Today I had the opportunity to attend an all day continuing education course on the availability of programs that, in a variety of ways, can help home buyers get started on the purchase of their new home.
First up, the Housing Trust of Silicon Valley. A non-profit which has been around 10 years and was formatted by leaders of the community. The objective was to assist families and individuals to purchase homes. In January 2011, the organization received $4 million dollars to assist over the next two years. There are several programs offered from this group. The Purchase Assistance Loan (PAL Program) related to Neighborhood Stabilization Program consensus neighborhoods. This program allows buyers to purchase foreclosed homes in San Jose. Maximum gross income of every individual in the household (over 18 years of age) begins at $86,950 for a single person up to a $163,950 for 8 individuals. Home buyer do not have to be a 1st time home buyer but must intend to occupy the home. Borrower must also complete 8 hours of HUD related education. If the home owner moves out and rents the property loan must be repaid. This is a deferred loan of 20% of the purchase price up to $50,000 at 0% interest rate. For more information about this program go to the web site or contact me.
Other programs from this organization include the Closing Cost Assistance Program (CCAP) and Mortgage Assistance Program (MAP). The CCAP program provides a deferred loan up to 3% of purchase price up to $15,000 for down payment and/or closing costs for first time homebuyers. The loan is repaid at time of sale or 30 years (whichever comes first) at a simple interest rate of 3%. The MAP program provides 17% of purchase price up to $85,000 in a simple loan that is at a rate of 1.5% over the first loan rate. This program is designated for first time home buyers and requires a minimum of 3% down.
City of Santa Clara also has the First Time Home Buyers Program (FTHB) and the Below Market Program (BMP). Currently, these redevelopment funds are at risk through Governor Brown’s policy but for the county these assets have already been moved into the Santa Clara County Housing Authority and the program is fully funded for 5 years.
The First Time Buyers program are for homes located in the city of Santa Clara and available through CHASE and METLIFE home loan lenders. The program provides $75,000 down payment assistance. This is a deferred second loan with no interest or payments within first 5 years. The home buyer is required 3% down.
The Below Market Program allows 10% of units in new for-sale housing development with 10 or more units to be affordable. Home owners are allowed to sell their home after 5% to the open market with an equity share program. After 20 years they are completed vested and can sell without equity share.
CalHFA has provided long standing assistance for many home buyers over the years. This program was established nearly 30 years ago to help first time home buyers with buying their first homes. This is a 30 year fixed loans that can go up to 102% of home value which allows home buyers to use money for closing cost as well. The CalHFA FHA loan program limit is $417,000.
This must be a single family home with no “income potential” add ons to the home (extra kitchens,studios etc). The home buyer will not be allowed to utilize CalHFA for properties that have been flipped. No matter how long ago the property was transferred to the investor. The rate is 3.25% simple interest (does not compound) and is deferred for 30 years. Which means there are no payments but there is no penalty for pre payment or early pay off. Borrower must contribute 1% of their own funds. This is a great program for first time buyers that are struggling with down payment. For more information about eligibility see the CalHFA or CalHFA down payment assistance visit the web site.
MCC Program provides tax credit for borrowers with home buyers that utilize the home is a primary residence. The program allows tax credits for the home borrower’s federal income taxes currently up to 15%. There is a potential for a recapture tax if the home buyer sells the home within 9 years. Even then the recapture tax is based on borrowers financial situation at the time of sale. The homes must be in designated target areas within San Jose. If you want to see if you are eligible, which areas homes are located, and which lenders and brokers can help see the following website.
There is also a Santa Clara County Down Payment Assistance Program for low income borrowers. It allows up to $40,000 down payment assistance for borrowers looking into Alum Rock neighborhood and Burbank areas of San Jose. It is a deferred loan on properties up to $570,000 value with 3% simple interest per year for the first four years and drops to 0% interest starting the first year to maturity. Maximum annual income per household ranges from $56,500 and $93,650. This is a HUD based program and applicants can learn more at web site.
Santa Clara County also offers a Home Rehabilitation Program for primary residences up to $100,000 for 3% simple interest to repair the home. Items that can be repaired incude roofs, fumigation, furnace, plumbing, and electrical work. The loan must be repaid by 30th year or when the home is sold. To see how to qualify for this program visit the county web site.
The City of Sunnyvale Homebuyer Programs consist of a Below Market Program and the First Time Homebuyer program. You must live or work in the City of Sunnyvale and the home must be located in Sunnyvale. This is a loan program that allows the borrower to borrow up to There are income limits and the first time home buyer must not have owned a home in the last 3 years.
The Below Market Program has homes available in DR Horton Lotus Community available. These are 3 bedrooms for $250,000 and are anticipated to be available by October 2011. O’Brien Homes on 920 Duane will be condominiums for 2 and 3 bedrooms for $344,000-$430,000 which are anticipated to be available October 2011. The Town Center homes will be 1,2,and 3 bedrooms between $290,000 and $390,000 and are anticipated October 2011. For more information on these new developments see information on the web site.
City of San Jose Home Ownership Program. Project Specific Loans for Neighborhood Stabilization Program (NSP) and Building Equity & Growth in Neighborhoods (BEGIN). They also have City-wide Loans through the Welcome Home Program and the Teacher/Public Service Assistance Program.
The Neighborhood Stabilization Program allow private developers to purchase foreclosed homes in targeted neighborhoods. Homes are renovated to meet health and safety codes which include green upgrades as well. These homes are then sold at fair market value. These homes are available to those who work in San Jose, currently live in San Jose, must attend an 8-hour education class, previously submitted and offer on NSP home, first time buyer, and in order which offers is received.
The BEGIN Program has certain homes available for first time buyer and provides up to 20% of sales price down payment assistance to new home owners. Some of the developments include THE 88, AXIS, VILLA FONTANAS, MODERN ICE, and THE WORKS.
Welcome Home Program up to $25,000 loan amount, no monthly payments, 3% simple interest, deferred for 30 years or until home is sold. Home must be located in within City of San Jose. Maximum purchase price is $481,650 and is limited to low-income households and require a city inspection. The city inspection is looking for illegal conversion and other safety issues.
Teacher Homebuyer Program (THP) provides up to $50,000 toward the purchase of a home. Buyer must be full time income in K-12 San Jose public school teacher or credentialed staff. This is a deferred payment at 3% simple interest for 40 years or until home is sold.
Home buyer programs and home owner assistance through the http://nhssv.org/
CalSTRS – California State Teachers’ Retirement System Home Loan Program. A great program for teachers, community college instructors and anyone who had a retirement account through CalSTRS. The new home owner must live in the property after purchase and the property must be located in California. The borrower can not own another property. Allows eligible borrowers to borrow with 3% down and no mortgage insurance. The max loan limit is $417,000 and for the first 5 years the payments are based on the 80% loan. After 5 years, the payment increases to cover the full loan amount payment. This is a 80% fixed rate loan for 30 years and a 17% fixed rate loan for 30 years. The borrower must place 1% of their own money but can have 2% gifted of the total 3% down payment required.
The HomePath program provides foreclosed homes to the buying public through a system that allows as little as $500 down. Financing is 97% but the the borrower can use other programs mentioned above to qualify. The advantage of this program is there is no appraisal and there is no mortgage insurance. There is also a first look period of 14 days that allow buyers who intend to occupy the home a chance to purchase first. After 14 days the bidding is opened up to investors and non-occupant buyers. First time investors can use 75% of rental income to qualify. We are starting to see more of these homes come available in San Jose and greater Silicon Valley.
Disclaimer: Details of each program are not included in this post and the only way to be sure of the whether you as the buyer/borrower qualify is to talk with the entity offering the program.
Of course almost every city has a Below Market Program and first time buyer down payment assistance available for buyers. It is always good to check with the local municipality to see if you qualify for any of these programs. For a complete list of city programs follow this link and click on the neighborhood city links.