Buying a Home with Only Half a Percent Down in California

California homebuyers can now purchase homes with only half a percent (0.5%) in downpayment funds.

The newly-announced CHF Access program, in conjunction with the existing FHA programs, means that California homebuyers no longer have to sit on the fence until they accumulate large down payments. With only half a percent down payment required, homeownership has just become much more accessible for many California families.

The CHF Access program (also called the Down Payment Assistance or DPA program) provides a 3% second mortgage at 8.25% interest for 15 years for low to moderate-income families in California, combined with an FHA fixed-rate loan amortized over 30 years. This reduces the FHA requirements for a 3.5% down payment to only 0.5% out of pocket for the buyers, since the sellers may contribute up to 6% to cover closing costs under this program. Even buyers with low credit scores (FICO’s) can qualify for this program, with debt-to-income ratios as high as 47%!

There are some restrictions, but they shouldn’t be too hard to overcome for most buyers. The buyer’s total income must meet the maximum income restrictions ($74,520 for Los Angeles County), and this program is only available for owner-occupied homes (no investors or rental properties). There is no need to be a first-time homebuyer, and both loans (the FHA loan and the DPA loan) can be handled by the same lender. The maximum total funding for this program is $5 million, so once California homebuyers have used up these funds the program will no longer be available unless it receives more funding.

If you’ve been thinking of buying a home in the Santa Clarita Valley but didn’t think you had enough money saved to take advantage of the current low prices, now may be a good time to talk with your lender to see if you qualify for this new low downpayment program. Santa Clarita real estate prices are starting to go up again, but there are still a lot of good deals out there! If you’re thinking of buying a home in the Santa Clarita area, you can start your home search here.