Buying a home has become harder in California for low to middle income borrowers, those with low down payments, and first-time home buyers with the temporary suspension of the CalHFA loan programs. This suspension is expected to last at least until the January meeting of the Pooled Money Investment Board (PMIB), or until the state’s budget crisis is resolved.

The role of the PMIB is to loan money to state agencies to advance program funds which will later be repaid through bond issuances. PMIB loans are used by CalHFA to initially fund conventional 30-Year Fixed Mortgage and down payment assistance programs. Members of the PMIB are the State Treasurer, State Controller and State Director of Finance, with the State Treasurer chairing the panel.

CalHFA First Mortgage Fixed Rate Loan Programs and Down Payment Assistance Programs which have been suspended effective December 17 and continuing until at least early January include the following:

• 30-Year Fixed Mortgage products, including:
  • Moderate Income
  • Low Income
  • Nonprofits & Affordable Housing Partnership Program (AHPP)
  • Extra Credit Teacher Program (ECTP)
• California Homebuyer’s Down Payment Assistance Program (CHDAP)
• Extra Credit Teacher Program (ECTP)
• School Facility Fee Down Payment Assistance Program (SFF)

The 100%-financed Community Stabilization Home Loan Program (CSHLP) and SMART Program will still be accepting loan applications during this temporary suspension period.  Down payment assistance from non-CalHFA sources will also continue to be accepted.

Apparently this freeze affects only new loan applications, not those that were already in the CalHFA pipeline as of December 19. If you have a home purchase in process and are unsure of whether your loan is dependent on CalHFA funds or not, please contact your lender!

There may be other options available to you, including FHA products, local loan or grant programs and assistance programs not funded by the CalHFA. It seems that programs like the CalSTRS (California State Teacher Retirement System) 80/17 programs are still available, since they are funded by sources other than the PMIB. However, remember that the federal FHA programs will now require a 3.5% down payment, up from the prior requirement of 3%.

More information on CalHFA loan products and down payment assistance programs.

The 30-year fixed rate was 5.67% a year ago, so we’re still looking at relatively low interest rates overall.

Major items affecting interest rates this week were the bombing of the trains in India and the June employment report.