Best Loans and Assistance Programs for First Time Buyers

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Making the jump from full-time renter to homeowner is no small feat, particularly in a housing market like California’s. Sometimes, scraping by with enough to make monthly payments seems like a modern miracle. Then you add the myth that you have to have 20% down to enter the market and many potential buyers feel that homeownership falls just outside their reach.

At NeighborWorks Orange County (NWOC), we are here to help you bridge the gap. 

The first step is to tackle the 20% myth. While a down payment is important, most of our clients work with programs and grants that accept a 3% down payment. Others are able to secure 100% financing for their mortgage.

 

Here’s how:

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Homebuyer Education Classes

Benjamin Franklin once stated that, “An investment in knowledge pays the best interest.” 

Particularly in a dynamic housing market like California, your first line of defense is educating yourself. That’s worth its weight in gold.

To put it bluntly, buying a house is a complicated process. Unfortunately, there are dozens of opportunities to take missteps or sign up for things that have bad consequences. For example, many families who suffered foreclosure shortly after the crash of 2008 had adjustable rate mortgages, not realizing that their rate would drastically change. When that happened, they were unable to make payments.

Protect yourself through education.

Taught in both Spanish and English, our Homebuyer Education class outlines every step, evaluates different loan types, reveals different assistance programs and covers often overlooked realities of homeownership, such as establishing insurance.

Learn more about the program here.

 

Down Payment Assistance Programs

As promised, you don’t have to put down 20% to jump into homeownership. With two of our most prominent down payment assistance programs, you only need to bring 3% to the table. Because of the way the programs work, this money can actually be applied to closing costs if you choose. That means your loan actually covers the entirety of the mortgage.   

The IDEA and WISH programs are grants that match the money homebuyers bring to purchasing a home at a 3:1 ratio, up to $15,000. That means if you save $2,000, the program will put in $6,000 toward the purchase. Funds are fully forgiven after five years.

Both programs work with families whose income is 80% or less of the median income level for that area. Many two-income families are surprised to learn that they qualify.

Learn more about these programs here.

 

Community Reinvestment Act Programs

For families that do not meet the income requirements for the WISH and IDEA program, we look next toward the Community Reinvestment Act (CRA) programs. Lenders who have the CRA program will write mortgages without private mortgage insurance (PMI) for families who only have a 3% down payment. This program also has more lenient requirements on gift funds applied toward the down payment.

When you work with one of our NWOC coaches, they evaluate each lender to find the best option for you. This means looking at all the terms and additional programs, such as closing cost assistance through the CRA.

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Your Unique Journey To Homeownership

No one’s situation is unique. Each family has different obstacles and circumstances that they are overcoming to pursue the dream of homeownership. That’s why we recommend connecting with one of our free homeownership coaches. They sit down with you to understand your specific scenario. Then they work to find the best, and most sustainable, route to homeownership for you and your family.

Schedule your appointment today.