Question:

In California is there an alternative to the FHA home mortgage loan?

Answer:

California citizens should know about the CalHFA loan program, which comes as a real alternative to an FHA home mortgage loan for first-time homebuyers with low and average income in California.

CalHFA stands for California Housing Finance Agency. Like an FHA home loan, CalHFA assists low to average income first time home buyers, legally residing in the US, and can provide very affordable below market rate mortgage financing.

The CalHFA loan program very much resembles the FHA home mortgage loan as it also allows a first mortgage of up to 97% fixed-rate. The down payment can vary between 3 and 5% and gifts can be used according to certain restrictions. To assist home shoppers with the down payment, CalHFA have developed 100% financing programs with 30 to 40-year terms.

In comparison, an FHA home mortgage loan also can provide 100% financing in certain cases only, such as permanent home destruction in result of natural disasters.

Requirements for the CalHFA Home Mortgage Loan

You usually must be a first-time homebuyer - you can't have been in title of your primary residence for the last three years, or expressed ownership interest (check if that applies to your case as properties in federally-designated Targeted Areas are exempt from this requirement). A Targeted Area is one in which over 70% of the families have below 80% of the median income for the state.

Your annual family income can't exceed income limits for household size and county and the real estate must be owner-occupied until sold or for the lifetime of the loan.

Much like an FHA home mortgage loan program, CalHFA does not lend money directly to borrowers; rather, they work with CalHFA approved lenders and purchase closed loans meeting the CalHFA requirements.

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