Like the rest of the country, the California housing market is now so competitive that it’s become increasingly difficult for residents to realize their dream of buying their first home. Last month, however, a press release from the CalHFA announced a new program they hope will help turn some renters into homeowners.
Launched in April, the Forgivable Equity Builder Loan allows qualifying first-time homebuyers to borrow a downpayment of up to 10% of a property’s purchase price. With a 0% interest rate, the loan would be forgiven if the owner remained in the home for 5 years. If the owner chooses to leave before the 5-year mark, they may have to pay back part of the junior loan.
“Home equity has proven to be one of the strongest ways for families to build and pass on intergenerational wealth and CalHFA is committed to improving equitable access to homeownership for all Californians,” said Tiena Johnson Hall, CalHFA’s Executive Director. “The Forgivable Equity Builder Loan, which gives first-time homebuyers a head start with immediate equity in their homes, will help California families build and pass on that wealth with a secure, stable home loan.”
To qualify, a California resident must prove they make less than 80% of the median income of the county in which they’re buying the property. According to Fannie Mae’s Area Median Income Lookup Tool, potential borrowers in Los Angeles County must make less than $68,880 a year. Additionally, the borrower must be purchasing a single-family home they intend to live in as their primary residence and complete homebuyer education counseling through an approved organization.
Are you considering buying your first home? Then email us or give us a call at (323) 412-9060 and we’ll help you figure out how to take advantage of this exciting new program!