First-time Buyer Programs Help Turn Renters into Homeowners

June is national homeownership month and while that may not mean much to those who already own homes, it can be a sore spot for non-homeowners who are hoping and in many cases, especially in California, struggling to save enough money to one day settle into a home they own.
By: Phoebe Chongchua: Realty Times
The California Association of Realtors just reported that the median price of an existing home in California increased by 10.2 percent in April. However, sales decreased 21.4 percent, when compared with the same period a year ago.

Creeping-up interest rates and high-priced housing continue to keep many renters from achieving the American Dream. That's where the California Housing Finance Agency works to fill the financial gap.

"Typically in the past when the interest rates go up like they have been, and will probably continue to go up slightly through the first of the year, our business typically gets stronger," says Kenneth Giebel, director of marketing for the California Housing Finance Agency (CalHFA).

"Our last 14 weeks have been the highest we've had in our history. We're doing about $50 million a week," says Giebel.

Since 1975 when it was first created, CalHFA, has been touted as the state's affordable housing bank making below-market-rate loans through the sale of tax-exempt bonds. The bonds are repaid by revenue generated by mortgage loans. The agency has invested more than $14 billion in non-taxpayer funds to help more than 135,000 California families purchase homes with a mortgage they can afford.

"Our business is pretty strong because our interest rates are about a point lower across the market for each one of our products," says Giebel.

Of course, certain restrictions apply in order to take advantage of CalHFA's mortgage products and assistance. To qualify you have to be a first-time homebuyer, within a certain income range, and typically be purchasing a median-sales-priced home in a given county. Specific qualifications can be found here.

For instance in San Diego, a first-time homebuyer (someone who hasn't purchased a home in the last three years) could possibly utilize the loan products offered by CalHFA if the (resale) home were $535,000 or less and the buyer had an income of approximately $82,800 for a family of no more than two people, or, for a family of three or more, a moderate income cap of $96,600.

CalHFA has a variety of mortgage products including a 40-year mortgage, a 35-year mortgage with five years interest-only and a guaranteed low fixed-interest rate for the entire 35-year term, down-payment assistance, and free mortgage protection.

"Our interest only PLUS product continues to grow. It's a fixed-interest loan. You qualify on the first five years on the interest-only and then at payment 61, your fully-amortized amount kicks in, the principle and interest, and it becomes a 30-year fixed loan," explains Giebel.

The 40-year mortgage product is aimed at giving first-time buyers a little longer term, making homeownership a stronger possibility for more people.

"The vast majority of the CalHFA loans come with HomeOpeners mortgage payment protection which is in case you should lose your job we will make six payments during the first five years of up to $2,500 a month," says Giebel.

For those living outside of California and in need of help purchasing their first home, contact your state's local housing finance agency.

Homeownership doesn't have to be just a dream; it can become reality when the right programs and the right people connect.