Los Angeles First-Time Home Buyers Programs

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The Los Angeles real estate market is not welcoming to first-time buyers.

According to the California Association of Realtors, only 25 percent of all LA residents can afford a mid-priced home. This can be even more difficult for first-time buyers, who don’t have a property to sell to cover the cost of a down payment.

But there are programs at the local, state, and federal levels that can help first-time home buyers, and many help borrowers with those expensive down payments.

Home buyers are probably already familiar with resources like the US Department of Housing and Urban Development’s FHA loan program, or the VA loans available to US military and veterans.

But these are not the only options. Below are six options available to buyers in the LA area.

To take advantage of these programs, buyers must also obtain loans from private lenders, so credit limits or other financial restrictions are likely to come into play. But it is worth considering these options if the accession to property seems out of reach.

California’s First Mortgage Programs

The California Housing Finance Agency’s first mortgage program is available to most first-time buyers in California who meet income limits where they live. In Los Angeles County, borrowers must $ 144,700 to be eligible.

Through the CalPlus and MyHome programs, which are usually paired, buyers who receive conventional home loans from qualified private lenders can then obtain smaller loans from the state agency. These are available to cover closing costs and up to 3.5 percent of the price of a home in down payment assistance.

Small loans are not counted towards monthly mortgage payments; instead, buyers pay them off in a lump sum when they sell or refinance their home, or after paying off the entire mortgage.

The maximum price for properties purchased using these loans is $ 765,000.

Los Angeles County’s First Home Loan Program

This program is somewhat similar to those offered by the state Housing Finance Agency in that borrowers can obtain financial assistance that covers the cost of a down payment and closing costs.

It is available to buyers in both incorporated and unincorporated LA County with one major exception: all of Los Angeles. This will frustrate many potential buyers, but there are plenty of beautiful areas to explore outside of the city limits.

To qualify for the program, participants must earn less than $ 125,280 for a household of one, two or three people. Purchases are also capped at $ 653,883, except in targeted areas where at least 70% of residents are considered low-income by state standards. In these areas, buyers can pay up to $ 799,190

The first-time buyer requirement is also lifted in targeted areas, meaning homeowners in those areas could take advantage of the program to trade in for a larger or richer property.

Program participants work with participating lenders to secure a home loan, which comes with a grant that can be used for down payment and closing costs. The grant, which buyers do not have to repay, can represent up to 4% of the total value of the loan.

Los Angeles County Home Ownership Program

This program also provides financial assistance for the down payment and closing costs, but the money comes from a pool of federal government grants. This means that there is a limit to the number of people who can participate in the program. The county is only accepting 20 applications by March 2020.

Participants, who must earn less than $ 66,800 per year (for a two-person household), can obtain loans of up to $ 75,000 through the program. Interest is not charged on these loans, and it only needs to be repaid after the buyer has sold the house or paid off the mortgage.

This schedule also excludes the city of Los Angeles, although some other major cities, such as Culver City, West Hollywood, and Hermosa Beach are included. A list of where participating home buyers should focus their research can be found here.

The county has a federal grant to provide financial assistance for down payments and closing costs to 20 households through March 2020.
Getty Images / EyeEm

Helping Home Buyers in the City of Los Angeles

The city of Los Angeles offers two very similar programs for first-time buyers. One is for low-income buyers earning less than $ 66,800 per year (for a two-person household). The other is for low-income buyers who earn between $ 62,001 and $ 130,800 (also for a two-person household).

The Low Income Program offers loans of up to $ 90,000 that can be used to cover the down payment and closing costs. Low income loans can only be used on purchases of up to $ 745,750 for single family homes and $ 513,000 for condos.

In the moderate income program, buyers can borrow up to $ 35,000 or $ 60,000, depending on how much they earn. There is no maximum purchase price for the Moderate Income Program.

The loans do not have to be repaid until the buyers sell the house or pay off the mortgage, at which time the city will also receive a percentage of the appreciated value of the house, which varies depending on the amount of the loan (if the loan is 10 percent of the purchase price, you will have to repay 10 percent of the appraised value of the house).

The bad news is that loans are only available to low-income buyers at this time because the moderate income program is out of funds.

Help with buying a home in Inglewood

The Town of Inglewood Lottery for first-time homebuyers closed in April. But keep an eye out: the city is expected to announce a new program next year.

NeighborhoodLIFT

Neighborhood Housing Services of Los Angeles County has partnered with Wells Fargo and NeighborWorks America to provide down payment grants of up to $ 25,000 to eligible buyers. Properties must be located in Los Angeles County and buyers must earn less than $ 104,400 (for a two-person household). The income requirements are lower for buyers using FHA loans.

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