A motherlode of down payment assistance programs is available for California homebuyers.
I’ve counted 347 programs, to be exact.
And you don’t necessarily have to be a first-time buyer for some programs. In today’s column, I’ll highlight a few of the best programs I found.
City National Bank gets top billing, offering $50,000 in grant funds in its the Ladder Up program, which borrowers don’t have to pay back. The funds can be used for down payment, closing costs and rate buydowns in the Los Angeles, Glendale and Long Beach metropolitan statistical areas or MSAs. The rest of Southern California borrowers can receive up to $20,000 in grant funds.
“We are dedicated to making the dream of homeownership a reality, and more accessible to the communities we serve,” said Vanessa Montanez, senior vice president and head of community lending at CNB. “Hundreds and hundreds of families have already received grants.”
The program was created as part of a redlining settlement with the U.S. Department of Justice. A department probe found that just 8% of its LA-area mortgage applicants were from majority-Black and Hispanic census tract residents. The bank and DoJ agreed settlement terms in early 2023.
The program comes with a 30-year fixed mortgage rate ranging from 6.3% to 7%, according to Montanez.
Montanez noted applicants must apply directly with CNB.
Here’s the fine print:
—Applicants do not have to be a first-time buyer, but you can only own one property at the time of closing escrow
—Borrowers must contribute at least 3% of the sales price
—660 is the minimum allowable middle FICO score for all borrowers
—You can use non-occupant co-borrowers regardless of whether they own property. (Think: family)
—The income cap is 300% of area median income. For example, the Long Beach AMI is $113,000. So, applicants can have an annual income up to $339,000.
—You can use this program for a rate and term refinance (no cash-out) up to $20,000 in majority, minority census tracts (only) to pay the existing mortgage balance down, pay closing costs and buy the rate down. (A majority-minority census tract is where more than half of the population is made up of minority groups.)
—No private mortgage insurance required
—Maximum loan amounts are the Fannie Mae high balance limits per county. The loan limit in L.A. County is $1,209,750.
—You can use layered financing for closing costs such as local second mortgages offered by municipalities
HSBC grant
Another excellent program I found is directly from HSBC Bank.
As of January, HSBC Bank is offering a $25,000 down payment grant named Opening Doors Grant Program. In addition, homebuyers can get $5,000 in closing cost assistance through a program named Community Works Mortgage Product, according to Leigh Smith, head of the U.S. mortgage division for the bank. “No lien is recorded (for the $25,000),” said Smith. (Which means, the borrower doesn’t owe money to the HSBC.)
The Opening Doors fine print:
—You don’t have to be a first-time buyer. You do have to occupy the property as your primary residence.
—This program is for either low-income borrowers or borrowers in a minority-majority census tract.
—You must contribute a minimum down payment of 3%. Certain income level restrictions may apply depending on the property’s location.
—There is no maximum loan amount. Your lowest middle FICO credit score for all borrowers can go as low as 620.
Resources available
If you want to learn what else is available, a great site to use is Down Payment Resource at downpaymentresource.com. The website features 347 assistance programs in California.
The site is very user friendly. I plugged in $100,000 of annual income seeking a $500,000 property. DPR returned 26 results.
Freddie Mac has a site name DPA One that offers more than 700 down payment assistance programs nationwide.
On Feb. 10, CBC Mortgage Agency and its website chenoafund.org announced a down-payment assistance program for 50,000 families. I think it’s worth a look and consideration as well.
My suggestion is to look for the largest amount of “grant funds” first. This means you don’t have to pay the money back.
Freddie Mac rate news
The 30-year fixed rate averaged 6.87%, 2 basis points lower than last week. The 15-year fixed rate averaged 6.09%, 4 basis points higher than last week.
The Mortgage Bankers Association reported a 2.3% mortgage application increase compared with one week ago.
Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $806,500 loan, last year’s payment was $53 less than this week’s payment of $5,295.
What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 5.75%, a 15-year conventional at 5.625%, a 30-year conventional at 6.375%, a 15-year conventional high balance at 5.99% ($806,501 to $1,209,750 in LA and OC and $806,501 to $1,077,550 in San Diego), a 30-year-high balance conventional at 6.75% and a jumbo 30-year fixed at 6.5%.
Eye-catcher loan program of the week: A 30-year mortgage, with 30% down locked for the first 5 years at 5.99% with 1 point cost.
Jeff Lazerson, president of Mortgage Grader, can be reached at 949-322-8640 or jlazerson@mortgagegrader.com.