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CalHFA

    UPDATED July 2011:     Want to obtain a $417,000 home loan to buy a home with a 1% downpayment and 640 FICO score in California?  Than keep reading!

      What is CalHFA? It stands for California Housing Finance Agency. CalHFA loans are funded from the sale of California bonds.

     In todays lending environment, CalHFA offers an excellent opportunity for first time homebuyers to obtain a home with little or no downpayment.  CalHFA has limitations on what the maximum purchase price and household income allowable, for each county in California.  Click here to find out the maximum income allowable in your county, and click here to find out the maximum allowable purchase price in your county.

    CalHFA, as of November 2008, is only offering a fully amoritzed 30 year fixed rate program for first mortgages.  In the past they had offered interest only and 40 year programs, however the mortgage meltdown has caused these higher risk programs to go away. Click here for more information on CalHFA first mortgage programs.

     How does CalHFA differ from FHA?  

     CalHFA also has several silent (where monthly payments on not required to be made) second mortgage options that can be used to pay for closing costs for your new home, or you can use it as a second mortgage purchase loan, meaning you put less money down.  The silent second mortgage, is charged at a low rate, currently 3.5%, but here's the kicker, ......you don't have to make payments on it!  You owe the money, but you can pay once you sell the home or refinance.  There are specific silent second mortgage types that are tailored for teachers, and there are others that are for anyone who qualifies.

     The silent second mortgages do have their own income limitations separate from the first mortgage income limitations, and the loan amount is limited to 3% of the purchase price, so not everyone qualifys, and they don't work for jumbo loans, but nevertheless, it is a program that is worth a look.  Click here for the silent second mortgage maximum income limitations.

     You can also use the CHDAP second mortgage option together with non CalHFA first mortgage loans, such as FHA or other conventional types of loans, which is a bonus.

     If you obtain a CalHFA for 96.5% of the purchase price, and a CHDAP second mortgage (one of the silent second mortgage types of loans), you can add the 2.5% CHDAP second mortgage, which means you need a downpayment of 1%. 

     CalHFA also accepts other public assistance financing (varies per county), that come from non-CalHFA sources such as churches and other non-profit groups who give funds to their members to use toward buying a home.  Put it all together, the 96.5% first mortgage, the 2.5% silent second mortgage, and the public assistance financing, and you can possibly buy a home with a zero downpayment and even have some funds left over to pay for a portion of closing costs.

     CalHFA rates are simalar than FHA, but FHA is more conservative on how much of a loan they will give you.  As with CalHFA, you will have to purchase PMI insurance (a montly insurance premium you pay to protect the lender in case your loan goes into default).  However, FHA requires PMI on all their loans, CalHFA only requires it when you put less than 20% down, like conventional lending.

     CalHFA has a few more differences from FHA.  One is that they have designated "targeted areas", census tracts,  in which they give a benefit to buy.  The areas are lower income, designated by CalHFA.  The benefit is that the first time homebuyer requirement is waived.  You can get more information on these targeted areas by clicking here.  Select the county and the "targeted areas" will appear.

     CalHFA also has a recapture on the their loans.  It is a fee that you pay, up to 6.25% of the loan amount, if you violate a list of conditions.  Basically, they want to make sure that you are not a "house flipper", and that since there was an income restriction you had to meet to buy the home, they want to make sure that you are making considerably more in income in the following 9 years after taking out the loan.  There are a few other caviats to getting hit with a recapture, but rarely does anyone have to pay it.  However please click here to read more about the recapture.

     CalHFA loans are a viable option in todays real estate market and it is often forgotten.  The maximum allowable purchase prices and income amounts, designated by CalHFA,  have not kept up with Californias surging home prices.  However, now that we are in a down market, CalHFA's maximum purchase prices, and income allowable, is now quickly alligning with California's declining market which is good news for homebuyers.

     CalHFA loans are fully documented income loans, meaning stated income is not permitted.  A minimum of a 620 FICO score is also needed, and the you can only use CalHFA loans to purchase a home, not for refinancing.

     To learn more about CalHFA products, please feel free to give me a call at 805-276-1942 or go to my website, www.affordableloansbykevin.com and click the "contact us" tab and send me an e-mail and I will get back to you at my earliest opportunity.