The First Lady Of Finance®

From my March 14th, 2010 column in the Sacramento Bee…

Help with downpayment and closing costs is one of the main things so many first time buyers need. Recently many of the programs that were previously available have not been because they have been out of funds. One of the places that can help and has funding for its programs is the non-profit NeighborWorks® HomeOwnership Center Sacramento Region.

Two of the most popular programs available are the NeighborWorks® CalHome program and the NeighborWorks® Citrus Heights program. As with most “special” programs, there are very specific guidelines involved with both programs.

Both programs require a minimum 620 credit score although some lenders may require a slightly higher score. They also both are for first time homebuyers—not have owned a home in the past 3 years–and require that the property be owner occupied and buyers must attend the “Preparing for Homeownership Workshop” at NeighborWorks®.

The CalHome program is for downpayment assistance and the borrowers may receive from $5,000 to $25,000 depending on how much is required to make the home affordable for the buyer. The interest rate is at 3 percent and it is a fixed rate second mortgage. Payments on the CalHome second are deferred for 30 years which means the borrowers have no payments on the second. CalHome is available in certain census tracts and/or redevelopment areas of Sacramento City and County. The borrower must have a minimum investment of $500.

The City of Citrus Heights program is for between $5,000 and $40,000 again depending on the amount of the subsidy needed for the home to be affordable to the homebuyer. This program however is limited to properties in Citrus Heights and has a sales price limit of $230,000. The borrower must have a minimum of 1 percent investment with this program.

Both the CalHome program and the City of Citrus Heights program have income limits of 80 percent of the median income limits for Sacramento County which are adjusted for family size. The income of all adult members of the household will be used in these limits even it the income is not being used for qualification of the borrowers.

The 80 percent median income for Sacramento County for 1 person is $40,800; for 2 people, $46,600; for 3 people, $52,450; for 4 people, $58,250; for 5 people, $62,900; for 6 people, $67,550; for 7 people, $72,250; and for 8 people, $76,900.

There are other restrictions on the property that may be more restrictive than some of the programs being used at this time because there is among other things a Housing Quality Standards Checklist that both programs must meet.

Borrowers must first be able to qualify for a first mortgage which may include the borrower having 2 months of cash reserves for the total monthly mortgage payment. This money is not used as a cost of the mortgage but the lender wants to see that the borrowers do have some reserve in case of a need.

NeighborWorks® also has two other downpayment assistant loans both for a maximum of $10,000. Both require a minimum of 650 credit score and both have a 5.5 percent interest rate and both of these loans are due in 10 years.

The first Down Payment Assistance program is for the greater Sacramento area while NeighborWorks® 2 is available for the City and County of Sacramento and for West Sacramento as well. NeighborWorks® 2 also requires that the buyer’s agent be a member of the Sacramento Association of Realtors®.

Both of these NeighborWorks® programs have an income limit that is 115 percent of the Sacramento median income limits adjusted to family size. For 1 person the limit is $58,650; for 2 people it is $66,988; for 3 people it is $75,398; for 4 people $83,735; for 5 people it is $90,419; for 5 people it is $90,419; for 6 people it is $97,104; for 7 people it is $103,860; and for 8 people it is $110,544.

All of these downpayment assistant programs while all different can help qualified borrowers with their downpayment. But these programs have restrictions that borrowers and their agents need to know about before looking for a property. See a Loan Consultant and see if any of them will help you.