Loans & Programs Available to First-Time Home Buyers in Orange County

home.ownership-400x0 (1).jpeg

It’s an exciting day when you finally receive the keys to your new home. The rush of freedom kicks in once you slip the key into the lock of your new abode. Walking around the dining room, you envisioning your family growing up around your table. Looking at your backyard you imagine a play space for your children.

To say it’s overwhelming enthusiasm might be an understatement.

It’s the dream so many of us are working for. Yet, for those who have never claimed the title of homeowner, taking that first step might feel like a giant leap. There are a thousand little steps that get you to that moment. This is particularly true if you live in Orange County. Our slice of paradise isn’t known for affordable living.

Homeownership is achievable.

Even more, you’re not alone in the process. We have counselors at the ready to walk with you throughout every phase. In fact, there are several unique programs designed specifically to help you experience that rush when you unlock the door to your new home.

nwworkshop_2016-1-600x400.jpg

Terminology: AMI

Before digging into the specifics of these programs, there is one term you need to be familiar with. AMI is the area median income. This is an income guideline used by the U.S. Department of Housing and Urban Development (HUD) to determine eligibility for government programs. The AMI of every region is recalculated each year. A separate AMI is factored for each family size, noting that the median income of a family of four differs from a single individual.

Most of the programs we work with require an AMI of 80% or less. This means you make a minimum of 20% less than the medium income levels in your area. For example, if the AMI for a family of four is an income of $97,500, then 80% is an income of $78,000.

Our counselors can help shed light on where your income for your household sizes falls on the AMI scale.  Most families are surprised that they qualify with their incomes.

Here are four programs that our counselors at NeighborWorks Orange County can help you see if you qualify for. 

WISH Program

This down payment assistance program matches funds that you raise toward your down payment three-to-one. If you bring $1,000 to the table, the WISH Program will bring $3,000. They will match up to $5,000 of your money. Three to one of $5,000 is $15,000, giving you $20,000 to put toward your new home. 

The WISH Program is a grant program. This means that if you receive funds from this program, everything will be fully forgiven after living in the home for five years. Should you and your family need to move before that, the remaining balance is due at a prorated term.

Qualifying applicants are at 80% or less of AMI and have attended a First-Time Homebuyer Workshop.

IDEA

The IDEA program is very similar to the Wish program. The difference is that the IDEA program works with you if you haven’t prepared to save the $5,000 today. To help facilitate saving up the funds, IDEA places you in a ten-month program. You meet with your counselor every month to review how things are going and submit funds to your initial investment. The minimum monthly investment is $25 and the maximum is $500.

If you max out your investment each month, you have the full $5,000 at the end of the program. The IDEA program then matches three to one, just like the WISH program. IDEA also has the same restrictions on living in the home for five years, the property being the primary residence and 80% or less of AMI. 

After five years, IDEA will also fully forgive all the funds.

CALHome Loan

CALHome is a 30-year term gap loan for up to $57,000. When you take out a CALHome loan to help with closing costs or a down payment, all payments are deferred for up to 30 years. Over that time, it will accrue 3% simple interest. No monthly payments are due until that 30-year gap passes.

This program is first come first served, so it is recommended you work with one of our counselors sooner than later.

To qualify, recipients must be a first-time homebuyer, have attended the workshop, and be at 80% AMI or less.

NSP

At Neighborworks Orange County, we were awarded redevelopment funding through the Department of Housing and Urban Development Neighborhood Stabilization Program (NSP). This program is solely designed to create more affordable housing opportunities in our community for low-to-moderate income families. 

Through this program, we purchase and rejuvenate foreclosed homes. Once they are fully renovated, we limit the sale exclusively to individuals and families in our First-Time Homebuyers Club.

There are two separate NSP programs. 

NSP 1 funded projects require that eligible buyers receive financial assistance to purchase the home. The maximum mortgage loan is $80,000 with the minimum $3,000. The buyer must bring 3% of the total sale price for the purchase. The applicant’s income must not exceed 120% AMI. All NSP1 loans are forgiven after the recipient stays in the home for 15 years.

NSP 2 funded projects have many similar stipulations to the NSP 1 projects, such as the minimum and maximum mortgage loans, qualifying AMI and the 3% down payment. The main difference is that NSP 2 has a 30-year mortgage that is not forgivable. 

Learn more about the NSP program here.

 Steps 

All of the mentioned programs require attending a HUD-approved First-Time Homebuyer Workshop. Not only is this required, this in-depth course gives you all the information you need to successfully purchase a home.

You can sign up for the course here.

Following the course, it’s important to work with a counselor to fully evaluate your situation and eligibility to determine if you are home-ready today. If you aren’t prepared to purchase now, our counselors will help you chart the path to achieving your dream.

If you are ready, they will help you apply for the program you qualify for, as well as navigate the other necessary steps.

charity_moving_in-8-600x400.jpg

Requalifying After a Foreclosure or Short Sale 

While the programs highlight first-time homebuyers, that classification isn’t as cut and dry as you would expect. If you went through a foreclosure, short sale or for whatever reason haven’t owned a home for more than three years, you reclassify as a first-time homebuyer.

For families that went through a short sale or foreclosure, you will need to wait four years and seven years respectively to purchase again. This is when those transactions fall off of your credit report allowing you to qualify for a mortgage.

Your Guide for the Entire Home-Buying Process 

Hopefully, this excites you about the possibilities of owning your own home! Our goal is to empower you. That’s why we provide so many resources to assist you. Homeownership is possible. 

If you have a lot of enthusiasm to move forward but aren’t quite sure what to do next, start with our first-time homebuyer workshop. This deep dive into all aspects of purchasing a home equips you with the most powerful information to move ahead on your journey. Even better, the $25 per person fee is refundable after you enter into escrow.

Once you complete the class, schedule a free one-on-one meeting with one of our dedicated counselors. They sit down with you, reviewing tax returns and bank statements and really work to understand everything about your unique situation. Then, they chart out the best path for you to move toward achieving homeownership.

first_time_buyers-600x511.jpg