Blog with MAE Capital

What is a home buyer program you ask?  It can be either a down payment assistance program or it can be a Mortgage credit of interest for certain income groups, or it can be a low down payment program to get home buyers into homes.  Home buyer programs can be classified as first time home buyer programs that will only be offered to those who have not claimed mortgage interest on a primary home on their Federal Tax returns for the last 3 years and programs that are designed to get a certain groups of people, generally lower income groups, into homes.  If you have not heard of these programs it could be beneficial for you to learn all you can as programs offered by the government or the private sector could end up saving you tens of thousands of dollars.   Some programs have been a staple in lending for years and helped millions get into homes over the years. 

Let’s explore some of the programs that are offered for home buyers to get into homes.  The first and the oldest program for potential home buyers is the FHA loan.  This loan has been around since 1933 and was designed to get folks into a home with a low down payment.  It came out during the depression to stimulate the economy and has been around ever since.  Today you can get an FHA loan with as little as 3.5% for a down payment.  The flexibility with FHA, allowing for the 3.5% down payment to come from a gift, an employer, the government, non-profit agencies, and home buyer programs.  FHA will also be more flexible in the underwriting standards than a privately insured conventional loan.  FHA will allow people to get into homes with less than perfect credit as FHA believes that everyone deserves a chance to own a home.  FHA loans will most likely be the underlying loan when coupled with other first time buyer or other home buying assistance programs.  FHA loans are only insured by the Federal Government private companies such as MAE Capital Mortgage can originate these loans and offer them to you.

Most home buyer programs are designed to be for lower income people, although FHA has no income limitations, other programs that piggyback to the FHA loan will.  These other programs may also have income limitations, meaning that you can’t’ make more than a certain amount of money annually to qualify.  When looking at these programs, you should take into consideration your income when trying to qualify for a specialty home buyer program.  The income limitation will vary from county to county so make sure you do your research before getting your hopes up to get one of these programs.  Generally, the income limits are 115%-140% of the medium income for the county.  For example, if you were trying to get a CalHFA loan the limits for Sacramento county would be $74,550 for a one-person household and $85,200 for 2, $95,600 for 3 and $106,250 for 4 and so on.  If you make more that you would not qualify for the program.  Your Loan officer would be able to do all the research for you for all programs that you would qualify for. 

The programs available in today's are as follows:

  1. CalHFA is for California Properties only and it uses a combination of a 1st mortgage and 2nd or even a 3rd mortgage for the down payment and closing costs. You need to be a first time home buyer and you will need to take a home buyer education course that is approved to get this type of financing. There are also income limitation as shown above. The home buyer courses can be done online or in a class setting. You can use the links for more information. The CalHFA site will give you a more detailed description of exactly how CalHFA works or you can contact one our trained loan officers to help you walk through the maze.
  2. USDA loan is another home buyer program. These loans not only limit the income that a borrower can make it also limits the location of the property to a “rural area”. The USDA loan will allow up to 100% financing meaning no down payment. Click here to see if you are eligible for this loan.
  3. Mortgage Credit Certificate (MCC Program): This is a program designed for a first time home buyer to be able to receive a credit for 20% of the interest paid on their loan from the federal government. The way this works is that a home buyer will receive a tax credit at the end of the year for 20% of the interest paid on their mortgage. For example if you paid $10,000 in interest you’re the first year on your mortgage you would get to take 80% or $8,000 as a tax deduction and $2,000 as a credit. What this means is that let’s say you do your taxes and you end up owing the government $2,000 in income taxes for the year you purchased your home the tax credit kicks in for $2,000 and you owe the government nothing. We can take the $2,000 divide it by 12 and give the borrower $167 a month more income to qualify. You can couple this with some of the other down payment assistance programs and get down payment assistance and a tax credit.
  4. Sapphire Grant: This is a grant for 3-5% of the sales price to be used for down payment and closing costs. This program has income limits and purchase price limits, so this loan is more for lower income borrowers. The first mortgage will be an FHA loan as we talked about earlier a down payment come from a non-profit agency which the Nation Home Buyers Fund is and they are the one who administrate this program.
  5. Help Grant: This is almost the same as the Sapphire Grant with income and property limitations.


There are programs that come in and out of the market all the time and some local counties may also offer special grants to low income home buyers.  These programs would be known by one of our trained loan originators and can walk you through the maze of the different programs and the different qualifications needed to obtain one of these programs.  Don’t be discouraged if you make too much money to qualify for one of these programs chances are we have a creative way to get you into home.  Although, every one of these programs fall under the new lending rules that have been tightened up over the last several years.   Be prepared to have your escrow go up to 2-4 weeks longer using one of these products as there are multiple agencies in some cases that must view and approve your loan or qualification for the program.  All in all, these are great vehicles to you into a home where you might not otherwise have qualified.  Here at MAE Capital Mortgage we value our clients and want to get them the best deal possible when applying for a mortgage.  Feel free to call us today to see if you fit into one of these or other programs that may be out there 916-672-6130.


Posted by Gregg Mower on September 28th, 2016 3:32 PM



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