When you come to TDR Mortgage and you ask us, “Hey, I want to buy a house,” one of the things that we do, is we evaluate all of the programs that are available to you. We break them down, and then we recommend to you what we think is the best program for you. And then of course, after our education process you have enough information to make the decision for yourself. So, let’s start. Here is California 1st Time Buyer Options Explained for a 425K Sales Price
At a 425 sales price, 425 sales price is a common price that would be use for conventional Freddie Mac or Fannie Mae financing and FHA.
So this is a financial data sheet. We do this a lot of times for agents that are hosting open houses so that they have a reference point for buyers that are coming to view their properties. So the first program that I’m going to feature, I like this program for this sales price specifically because of the amount of money that you’re gonna need to get into the property is around three to four thousand dollars total.
Buyer programs in California have a lot of restrictions to them, mostly having to do with debt ratio qualifying. So you’ll find that on a buyer program you may only qualify to a 325 sales price because you’re restricted to a 45 percent debt ratio.
Whereas with a regular FHA program you might be able to purchase up to 390 or 400000 because the debt ratio for regular FHA can go up to 56.99%. So, just a little bit of insider info for you.
CalHFA 1st time buyer program (California Housing and Finance Authority)
The CALHFA program stands for the California Housing and Finance Authority out of Sacramento. I’ve been originating these loans since 1998. They have a really great track record, we are able to close them in 30 to 40 days, no problem.
The CALHFA Program has a handful of nuances. You can do it FHA or Conventional. Here we’ve got a Conventional Program, 3% down.
Now the way that you’re only able to get in for three or four thousand dollars is because they offer to first time buyers a silent second and a silent third. On a 425 sales price, you’re going to have to eventually repay this 27,000.00 when you sell or refinance. Plus interest on the second, it fluctuates. It’s been around three percent simple interest for a while now, so it’s not a huge money maker for them. On the third, it’s referenced as a zip, so it’s a “zero interest product”, therefore if you borrower 5k you pay back 5k.
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So you can see that the total payment is 3100, funds to close 3500, interest rate six percent. Now you’ll notice this is a higher than average or higher than market rate interest rate, and it’s just something that you. It’s the price to pay to get in with only three to four thousand dollars.
The next program, a platinum 3% Conventional Buyer Program. This is a very unique program in that it forgives the amount that they assist you with. This particular instance, we’re highlighting this for teachers. So, three percent down payment. We’re gonna try to get 3% percent from the seller. So you’re gonna get in with a total of 6500 dollars.
Now, what’s cool, you have a 25000 grant that you’re getting for all of your down payment closing cost. If you’re a teacher it’s forgiven the day after you close. So guess what happens in six months? We’re gonna go and help you get refinance in six months to go down to a market rate interest rate. So you’ll see that the rate is six percent, and the funds to close around 6500, the payments around 3100 dollars.
So the beauty of this, when you’re comparing and contrasting these two programs. Here you’re gonna owe 27 to somebody, right? Here, you’re not gonna have any future liability. So that’s pretty darn cool. Okay. So I kinda feel like these are my two favorites when you don’t have a lot of money to work with.
Platinum FHA Buyer Program
The next program is the platinum three and a half percent down FHA program. This again is a teacher program. SO when you look at these two together. I don’t know, I’m liking the three percent Conventional as opposed to the FHA.
That’s it in a nutshell. Those are your first time home buyer opportunities here in the Southern California market. When you’re looking to buy or sell, please don’t hesitate to pick up the phone and call us at (909) 920-3500. I’d love to hear from you.