There is now an incredible opportunity for first time home buyers in California who need help coming up with enough funds for a down payment to qualify for a FHA loan to purchase a home. We can now offer a FHA loan with a CHDAP 2nd (California Home buyer’s Down payment Assistance Program) which gives a buyer 3% towards their down payment and closing costs. This program only requires that a buyer has to come up with 1% of their own funds towards the minimum down payment due of 3.5%.
Down payment assistance
CHDAP (California Home buyer’s Down payment Assistance Program) is a down payment and closing cost assistance program offered by CalHFA the State of California Housing Finance Agency. CHDAP gives buyers assistance of up to 3% of the purchase price with no payments for the life of the loan unless you sell or refinance. One of the greatest benefits of this assistance program is that it can be used with almost any other home loan financing, FHA or Fannie Mae conventional.
Here is a “Summary Sheet” that breaks down all of the program features, so you know who qualifies, what parameters are needed and how the program works.
Creative Ways to Use this program
Lets take a $300k purchase scenario, the buyer does NOT have the required 3.5% minimum down payment funds needed to purchase a homewith FHA financing and has only $4k in the bank. But the buyer qualifies for down payment assistance of 3%, which is a junior loan of 3% or $9k to help them with the down payment and closing costs. * Remember, you do not make payments on this junior loan unless you sell or refinance the first mortgage. We will use a $300k purchase scenario where a minimum 3.5% down payment is needed.
- Purchase price $300k
- 3.5% minimum down payment needed ($10,500)
- Buyer must put 1% ($3k) towards the down payment
The buyer is getting 3% assistance from CHDAP which totals $9k. Here is how the buyer will use the 3% in down payment assistance.
- Buyer will use 2.5%/$7500 of CHDAP towards the required down payment of $10,500
- Now only 1% of personal funds are needed ($3k)
- Buyer will use the remainder of the CHDAP loan of 1% and apply it towards the FHA 1% MIP
Result, total personal funds of only $3,000 were needed for the down payment.
* FYI Buyer can also use part of the CHDAP funds to buy down the interest rate and lower their monthly payment, so this is another creative option to save even more money.
Because of the down payment assistance program of 3%, the buyer did not have to wait to save enough funds (full 3.5%) to purchase as they only had to bring in $3k (or 1%) to close. Otherwise the buyer would have had to save for a few more years to bring in $10,500 to meet the minimum FHA down payment requirement of 3.5%!
A great opportunity to buy
This program presents a great opportunity for first time buyers, who until now assumed they need to have their full down payment of 3.5% (for FHA financing) saved up to be able to purchase their first home. Let your friends, family members and co workers know that this program is now available. Also, this example above is just one way to use CHDAP to help buyers purchase their first home. Feel free to contact me directly at 858-200-9602 so we can verify if you qualify for this program and chat about the best way to use this program to meet your specific buying goals. I look forward to chatting soon.