City of San Diego, CA – First Time Home Buyer Programs
Are you looking to purchase your first home? Our California first time home buyer programs might be the perfect solution to help you obtain the financing you need to purchase the home you desire. We provide excellent home financing options, and encourage you to compare our offered loan terms to other mortgage lenders.
San Diego, CA – First Time Home Buyer Loans
There are 5 types of first time home buyer loans. You may select different loan terms, such as a fixed rate or adjustable rate mortgage, and the number of years to repay the loan (such as a 30 year fixed rate mortgage).
Types of Mortgages:
- Conventional Loans – Conventional loans offer the best loan terms to borrowers with good or excellent credit (620 FICO or higher), as well as those who can afford to place a larger down payment. If you are able to put 20% or more down, you will be able to avoid paying private mortgage insurance (PMI). However, conventional loans also offer low down payment options, such as programs that only require 3% down.
- FHA Loans – FHA loans are a good option for borrowers who may not be able to qualify for a conventional loan. The qualification requirements for FHA loans are much more lenient than conventional loans. This includes options for home buyers with credit scores as low as 500 (in order to qualify for a 3.5% down payment, you must have a credit score of at least 580).
- USDA Loans – USDA loans provide home buyers the opportunity to purchase a home without any down payment. These loans are intended for borrowers with low-to-moderate income. In addition to not requiring any money down, you can also finance the closing costs into the loan. This means you can essentially buy a home with no money out of pocket!
- VA Loans – Active duty military members and veterans can apply for a VA loan which allows you to buy your first home without any down payment. These loans are not available to the general public, but exclusively to military/veterans.
- Jumbo Loans – Any loan that does not meet the conforming or FHA loan limits is a jumbo loan. San Diego County has the following conforming and FHA loan limits for 2019: Single unit: $690,000. Two units: $883,300. Three units: $1,067,750. Four units: $1,326,950. If you want to buy a more expensive home, and have the income to qualify, we provide what are known as jumbo loans up to $2,000,000.
The above 5 types of loans are the main first time home buyer options that exist. We can help you determine which loan is the right fit for you based on your particular needs and eligibility.
California Down Payment Assistance Programs
First time home buyers in San Diego, California may be eligible for down payment assistance. This includes statewide programs, as well as a program offered exclusively in the City of San Diego.
City of San Diego Down Payment Assistance
The San Diego Housing Commission offers up to 17% of the purchase price in down payment assistance. The money is provided as a deferred loan with a 3% interest rate. No payments are required on the loan for 30 years, and the loan does not need to be paid off until you either sell the home, or no longer occupy the property as your primary residence. To qualify for the assistance, you must meet the following requirements:
- The home must be located within the city limits of San Diego.
- You must be a first time home buyer.
- Have a credit score of at least 640.
- Contribute at least 3% towards the down payment from your own funds.
- The maximum sales price allowed is $417,050 for an attached property, and $665,000 for a detached property.
- Single family homes, townhomes, and condominiums are eligible.
- The highest debt-to-income ratio (DTI ratio) allowed is 45%.
- Your household income must not exceed the income limits, which are outlined below.
- 1 person household – $54,500
- 2 persons household – $62,300
- 3 persons household – $70,100
- 4 persons household – $77,850
- 5 persons household – $84,100
- 6 persons household – $90,350
- 7 persons household – $96,550
- 8 persons household – $102,800
To learn more about this program, visit the San Diego Housing Commission website.
CalHFA MyHome Assistance Program
The California Housing Finance Agency offers up to 3.5% of the purchase price in down payment assistance. The funds are provided as a deferred payment loan, which does not have to be paid back until you sell the home.
- Be a first time home buyer.
- Occupy the home as your primary residence.
- Complete a homebuyer education course.
- Meet the income limits for your county.
- Purchase a home within for less than $765,000 (the maximum sales price allowed statewide).
To learn more about this program, visit the California Housing Finance Agency website.
Would you like some help learning about what down payment assistance programs may be available to you? Our loan specialists have a great deal of expertise on these programs, and can help you understand the qualifications, and see if you are eligible. It is certainly worth the effort to find out! To get some expert help, request a free consultation.
California First Time Home Buyer Tax Credits
The state of California allows for certain tax credits for first time home buyers (or anyone who has not owned a home in the last 3 years). The MCC program allows you to deduct money from your annual federal taxes. These credit will save you money on your annual taxes, and also assist in qualifying for a home loan by improving your debt-to-income ratios.
The MCC tax credit is not to be mistaken with tax deductions for your mortgage interest. This is separate, and instead this is money that is taken off your tax liability. It is an actual dollar for dollar reduction in what you have to pay. The amount of your tax liability that can be deducted is 20% of the total annual interest. If you pay $10,000 in interest, 20% of this is $2,000. Therefore, the annual taxes that you owe can be reduced by $2,000.
CalHFA may also be used in conjunction with other tax credits. You can learn about what you are eligible for by speaking with a licensed accountant. We do not offer any tax advice, but based on what you report, a loan specialist can assist you in calculating what you may be able to save each year. We encourage you to speak with a loan consultant who can advise you of what you are eligible for. You can request a free consultation through our online web form. This is a 100% free and no obligation mortgage consultation which will answer any questions you have and assist you in getting pre-approved if you wish to apply for a first time home buyer loan.
You can learn more about the Mortgage Credit Certificate (MCC) on the CalHFA website.
Frequently Asked Questions About Buying Your First Home
How much do I need for a down payment?
It depends on the type of loan you want. USDA and VA loans often will not require any down payment. FHA loans require a 3.5% down payment. Conventional loans typically require either 3% or 5%. If you receive down payment assistance, you may not need any money for your down payment.
What is the maximum loan amount that I can qualify for?
The amount that you will be allowed to borrow will depend mostly on your income, as well as the particular type of loan you are interested in. There are maximum loan limits for each type of mortgage program which are set at the county level. Conforming loan limits are the maximum loan amounts allowed for conventional mortgages. FHA loans have their own loan limits. This is not necessarily how much you can borrow though, but the maximum amount allowed in your location. The amount that you can personal qualify for will be based upon your income, and how much debt you have. For most loans, your monthly mortgage payment, along with your monthly debts may not exceed 43% of your income.
Can I buy a home without a real estate agent?
It depends on your state and the type of loan program. For some states, you must use an agent. In other states, you are not required to use a real estate agent for many loan program, such as conventional mortgages. However, some loan types require that you use a real estate agent regardless of your location, such as USDA loans.
Do you have first time home buyer loans for bad credit?
Yes, we offer mortgage options for borrowers with bad credit. This includes FHA loans for bad credit, which you can possibly be approved with a credit score as low as 500. However, a 580 credit score is required for the 3.5% down payment. If your credit score is between 500-579, then you will need to put 10% down.
Can I buy a home if I owe tax debt?
For government-backed loans, such as FHA, VA, and USDA loans, you can buy a home with tax debt as long as you have made a payment plan with the IRS, and are not behind on the payments. Any federal debt must be in good standing in order to get a government-based mortgage. If your tax debts have moved into the status of a tax lien, this will prevent you from getting a home loan until it is resolved.
Can I buy a home if I have student loans?
As long as you are not delinquent on the student loan payments, and the monthly payments do not cause excessive debt-to-income ratios, you can still get a mortgage.
Can I buy a home without my spouse?
A common question is if you can buy a house without your wife or husband. The short answer is yes. There are numerous reasons someone may want to exclude their spouse from a mortgage application, such as lower credit, lack of job history or income, or one spouse having excessive debt that could prevent an approval. You may be able to qualify and get a home loan without your spouse.
How do I know if I am ready and prepared to own a home?
It is critical to consider the often unexpected expenses of buying a home. This includes repairs, maintenance, and of course furnishing the home, monthly utilities, and all other expenses that are associated with homeownership. A common mistake is to just look at the difference in rent to your total mortgage payment. Almost every year, you can expect to have to pay for various upkeep to keep the property functional. This can include anything from repairing a hot water heater that broke, to landscaping, and various maintenance.
Something else financial consultants advise is that you have at least 3 months of reserves. This means that you could afford to make your new mortgage payment for at least 3 months in the event that you lose a job or have some other unforeseen circumstance that the savings would be needed for. This is not a requirement for most home loans, but it is good advice to consider.
Have more questions about buying your first home? Give us a call at 1-800-731-3560.