Low-income Californians looking to buy a home have a new tool at their disposal: an interest-free loan to use toward their down payment which, if certain criteria are met, doesn’t have to be paid back.
The California Housing Finance Agency started offering this help last month through the Forgivable Equity Builder Loan assistance program. The Times outlined the program in March as part of a series on how to buy a home in Southern California.
Here are some more details on what’s on offer, as the state tries to make it easier for first-time buyers in a brutal housing market.
Do I qualify for the loan?
To qualify, you must be a first-time home buyer and have a household income of no more than 80% of the median income in your area, which is typically defined as low-income. In Los Angeles County, that means you need a household income of $68,880 or less.
If you meet those criteria, you can get up to 10% of your home’s purchase price to use toward your down payment.
Previously, low-income households could receive up to 3.5% of their home’s purchase price through a different state program. That money was not only less, but also had to be paid back with interest.
Will I have to pay the loan back?
The Forgivable Equity Builder Loan carries a 0% interest rate and is forgiven in full if you stay in your new home for five years.
How can I apply for this program?
Eligible Californians can apply for the assistance through private lenders approved by the state. A list is available here.
Why is the state doing this?
Soaring home prices, turbocharged during the pandemic as people sought out more living space, have made buying a home even more out of reach for many Californians, especially those buying for the first time. The state is looking for new ways to help.
“Home equity has proven to be one of the strongest ways for families to build and pass on intergenerational wealth and CalHFA is committed to improving equitable access to homeownership for all Californians,” Tiena Johnson Hall, CalHFA’s Executive Director, said in a statement when the program was announced.