The California Homebuyer’s Downpayment Assistance program (CHDAP) is a 2nd lien loan with deferred payments and simple interest. The program is intended to assist low to moderate income first time homebuyers in California with a loan that can be used for down payment and/or closing costs. The loan is for up to 3% of the sales price or appraised vlaue, whichever is less. The borrower will be required to contribute at least $1500 of their own funds to the transaction.
Thought CHDAP is most often used in conjunction with FHA financing, the program can be used when the first mortgage is a Conventional, USDA or VA loan. Below is a program summary reflecting the new guidelines for the California Downpayment Assistance Program.
General Elegibility requirements for the California Homebuyer’s Downpayment Assistance Program are:
- First Time home buyer status- all borrowers must meet the definition of a first time home buyer (a person who has not had an ownership interest in any principal residence during the previous 36 months)
- Occupancy – Borowers must occupy the property as their primary residence within 60 days of closing AND continue to occupy the home until the property is sold or the loan is paid off.
- Income Limits – The HOUSEHOLD income may not exceed the published maximum income limits for the program. Please note that income calculations for eligibility may be different than calculations for loan qualification.The total income of the borrower AND any other person who is expected to occupy the property will be included to determine if the loan meets the income limit eligibility. However, only the income of the persons on the loan will be included for qualifying purposes.
- Maximum Debt to Income ratio: 43%.
- Minimum Credit score: 640 unless the first mortgage is a conventional loan. Conventional loans with less than 5% down require a 680 credit score.
- Assets- funds for the transaction can come from the borrower’s own funds or gift.
- Repayment- the principal and interest on the loan is due and payable when the property is sold, title in transfered, first loan is paid or refinanced or if the home is foreclosed on.
- Current interest rate : The rate for CHDAP as of Aug 9th is 3.25%
This information is meant to give you a general idea of the program guidelines. There are many details that are not covered in this material. Contact me for additional information