Would you buy a home if you could afford the down payment?
This new program called California Homebuyer’s Downpayment Assistance Program (CHDAP) just may be what you are looking for!
The new California Homebuyer’s Downpayment Assistance Program (CHDAP) is designed to help first time homebuyers who have low-to-moderate income purchase a home.
How Does The Program Work?
When you purchase a home through FHA you have to put 3.5% down on whatever the sales price is for your home. For example, if you purchased a $200,000 home, your down payment would be $7,000.
Well with this new program, first time homebuyers only need to bring in 1% of the purchase price. That is 0.5 percent for the down payment and 0.5 percent for the closing costs.
Using our previous example, for a $200,000 home, $2,000 is needed for a down payment from the buyer. The additional $5,000 that would have been needed with FHA, is now being placed as a second mortgage.
Under this program the buyer will have a first mortgage of $198,000 ($200,000 minus $2,000) and then a second mortgage of $5,000 for the “gift” as a down payment.
With CHDAP, the second mortgage does not need to be paid. It is required to only be paid if the buyer decides to sell the home or refinance. Otherwise it is known as a “silent mortgage”. However, we advise homebuyers to pay the second mortgage as well. In this scenario it is approximately $30 more a month to pay both mortgages.
- To be eligible for the CHDAP homebuyer’s assistance, you MUST be a “First Time Homebuyer”. This means that the borrower cannot have owned a home in the past three years.
- The home purchased by the borrower must be the primary resident
- The borrower will need 3 current consecutive years’ tax returns
- The property must be owner occupied for the term of the loan or until the property is sold.
Borrower’s Income Limits
There are income restrictions for the CHDAP program because it is designed to help those with low-to-moderate income.
The income limits vary on what county the home is being purchased in addition to the number of dependents.
Example for Southern California Areas using FHA as first mortgage:
Borrower’s Down Payment Contribution
The borrower is required to pay from their own funds a minimum of 1% of the loan amount or $1,000 (whichever is greater).
Borrower’s Credit Requirements
A typical credit requirement for a FHA mortgage with a LTV of 95% (meaning you are financing 95% of the home) is 640.
Any loan that is financing 95.01-100% of the home with CHDAP will have different credit requirements.
Properties Allowed For Purchase
- Single Family Units
- Agency Approved Condominiums
- Planned Unit Developments (PUDs)
- Five Acres Maximum
- Flips (ONLY 91+ days or more)
If you are a first time homebuyer, don’t miss out on this great opportunity using the California Homebuyer’s Downpayment Assistance Program.