By: Eve Mitchell
March 24, 2010
Like many first-time homebuyers looking in today's real estate market, Christina Estrada had to compete with all-cash investors and buyers with hefty down payments.
To overcome that hurdle, she obtained a $35,000 down payment loan from the CalHome program to help finance the purchase of a $175,000 two-bedroom townhome in San Leandro. Estrada, 29, who works in the accounting department of an Oakland law firm, moved into her new home in March.
"It really helped. It was very generous," said Estrada, who obtained the CalHome loan through the Bay Area Home Buyer Agency ( www.myhomegateway.com ), a nonprofit that offers free home-buying classes and counseling and access to various down payment assistance programs in Alameda, Contra Costa, San Francisco and San Mateo counties.
The CalHome program, along with other financial assistance programs, will be discussed at a free home-buying seminar this Saturday in San Leandro.
There is still $480,000 in CalHome money available to help other qualified first-time homebuyers buy a home in Alameda County (there is none for Contra Costa County). Program participants don't have to live in the county, provided they meet income and other program requirements. To qualify, for example, a family of four can have a yearly income of no more than $66,250.
They also need to be in a binding contract to buy a home no later than mid-June to meet the deadline for placing the money, said Bay Area Home Buyer Agency manager Walter Zhovreboff, who added that the agency will lose the money if it's not spent by Aug 1.
CalHome loans are made possible by a round of funding to nonprofits from the passage of an affordable housing bond by voters in 2006. The loans are used to help low- and moderate-income people become first-time homeowners, defined as someone who has not owned a home for three or more years.
A CalHome loan is deferred, which means no payments are due until the home is sold or refinanced or after 30 years from the purchase date.
Estrada learned about the CalHome program after attending an agency-sponsored first-time homebuyer seminar.
It gave her valuable information about the home-buying process, along with helping her determine if she was ready to buy a home and how much home she could afford, she said. "It makes you more optimistic about buying a home," said Estrada. "They are not only helping you get into a home but helping you keep a home."
And because Estrada contributed $5,000 to cover the closing costs, she also qualified for a $15,000 loan from the Federal Home Loan Bank WISH Program that will be forgiven after five years of homeownership.
The $50,000 in loans from the CalHome and WISH programs made it possible for Estrada to take out a 30-year fixed conventional loan for $130,000 with a 5.4 percent interest rate to finance her $175,000 townhouse. She also qualified for the $8,000 federal first-time homebuyer tax credit, which is set to expire June 30.
A CalHome loan can be used in cities such as Berkeley, Albany and Newark that do not provide down payment assistance programs for first-time homebuyer, Zhovreboff said. The only city in Alameda County where a city down payment assistance program can be used in conjunction with a CalHome loan is Oakland, he said.
A CalHome loan can also be used in unincorporated areas of Alameda County such as San Lorenzo and Castro Valley.
Despite the advantages of a CalHome loan, Zhovreboff is worried not enough people will obtain the loan before the deadline for placing the program money. Many people don't know such programs exist in the first place or if they do hear about them are skeptical. "They think it's too good to be true," he said.