SOME FIRST-TIME HOME BUYERS NEED AS LITTLE AS $1,000. Is this a return of the nutty days of zero down payments and the now-infamous liar loans? Nope — it is possible with the aid of several state of California-backed programs, designed to assist low- and moderate-income families in purchasing a home.

The California Housing Finance Agency offers various programs that provide down payment and closing cost assistance. These are typically low-interest loans that are paid back when the homeowner sells or refinances their property.

CalHFA has actually been offering these programs for many years. However, borrowers trying to use these hybrid programs in the super-hot seller’s market of the last few years did not stand a chance of getting their offers accepted by sellers that were choosing from multiple offers, and in many cases cash.

But as markets begin to normalize, these programs may be the answer for many families that want to purchase a home and are qualified in all other aspects, but just don’t have the ability to save up several thousand dollars for a down payment and closing costs.

There are numerous options available, and borrowers can mix and match between the different product offerings. There is even one program that is designed to offer assistance for teachers who commit to teaching in schools where test scores are lower than state averages.

So what are the basics? Well, first of all you have to qualify — unlike the liar loans of the past, these are government programs with strict income and credit requirements.

These programs are intended to help low- to moderate-income families., so there are income limits. The limits vary depending on the median income of each county, and also on the size of the family. A family of four in Solano County, for example, can earn up to $94,950, whereas a family of one would be limited to $66,450. Some counties have higher limits, some lower.

CalHFA uses completely different formulas for calculating income than traditional lending formulas. CalHFA uses all income that a borrower receives, even income that most lenders would not count in their calculations. As a result, most of the loans that are declined are because of borrowers making more income than allowable under the program. Make sure you are working with a knowledgeable lender that is familiar with CalHFA quirks, otherwise you could get disappointed.

The tricky part about qualifying is that you need to make enough income to qualify for the “Conventional” or FHA first mortgage, but not make too much, so that you still qualify for CalHFA assistance.

The credit requirements are pretty straightforward. Borrowers with a minimum score of 680 or better can buy a home with as little as $1,000. Borrowers with credit scores below 680 are required to contribute a minimum of $1,500. Borrowers must have a minimum score of 640 to qualify for the program.

These programs are limited to first-time home buyers. The program defines first-time buyer as someone who has not owned a home in the last three years. So conceivably, a family that lost a home three years ago could now purchase a home under this program with very little money down. Of course this family would need to be able to demonstrate that they have recovered from whatever calamity caused them to lose their home.

CalHFA offers several options to assist home buyers. To determine the option that is best for your circumstance, be sure to consult with a licensed loan originator who is trained and authorized by CalHFA to offer these programs.

As with any major purchase, buying a home requires planning and patience. If you are considering a home purchase, it is always a good idea to get with your lender early in the process to insure not only a successful purchase, but a successful experience as a homeowner.

Guy Benjamin (CAL BRE License #01014834, NMLS 887909) writes a weekly column for The Herald, offering general information on real estate matters. As it is impossible to address all possibilities and variations, he will try to answer individual questions by readers who contact him at 707-246-0949 or guyb@fairwaymc.com.

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