San Diego has some of the highest rent in the nation which is why you might be considering buying your first home! When you choose to pay for a mortgage instead of rent, you will no longer have to worry every year if your landlord is going to surprise you with a large rent increase. With a mortgage, you will have a consistent payment the entire time if you choose a fixed rate. Once it’s paid off, you won’t have any rent or mortgage to pay! San Diego is filled with first-time homebuyers who aren’t aware of all of the programs available to them through the city of San Diego and through the government. Purchasing your first home might be more within your reach than you thought. Read through the different first-time homebuyer programs in San Diego and then give the Wolf Real Estate Team a call today to find your dream home in San Diego!
Down Payment and Closing Cost Assistance in San Diego
First-time homebuyers with low income may qualify for deferred payment loans for up to 17% of the price of the property to pay for the down payment. You can also qualify for a deferred payment loan for up to 4% or $10,000 of closing costs. To be eligible for this amazing program in San Diego, the purchase price of your home must not exceed $437,000. In addition, this must be your primary residence. Other requirements include income requirements. Your income must not exceed 80% of the San Diego Area Median Income (AMI). You can check if you’re eligible here. In addition, you must be able to contribute a minimum of 3% of the purchase price to the sale. You must also have not owned a home in the past 3 years.
This program only applies to the cities that are unincorporated in San Diego. Cities include Coronado, Carlsbad, Encinitas, Del Mar, La Mesa, Imperial Beach, Poway, Lemon Grove, Santee, San Marcos, Vista, or Solana Beach. Lastly, you don’t need to make payments on the loan until you have paid off your mortgage, sell the house, or no longer live there. The loan must be repaid in one payment that equals any accrued interest plus the original principal loan amount.
Homeownership Grant Program in San Diego
This grant also applies to San Diego residents whose family income does not exceed 80% of San Diego’s median income. The homeownership grant helps residents with paying for their down payment as well as closing costs. This grant is forgiven at the close of escrow and must be used with the SDHC Deferred Loan Program. The homeownership grant gives you up to 4% of the purchase price, or appraised value, depending on which is less.
Mortgage Credit Certificate
Homeowners can qualify for a federal income tax credit of 20% of their mortgage’s annual interest paid. Qualified homebuyers should have income that does not exceed 140% of the AMI. This tax credit is a dollar-for-dollar reduction in that homeowner’s federal tax liability. This tax liability increases the household’s income that helps them qualify for their mortgage loan make their monthly payments. If a homebuyer sells their new home within 9 years, they may need to pay a recapture tax. Find out more about the mortgage credit certificate and if it can help you purchase your first home.
Other First-Time Homebuyer Information
Thanks to the Federal Housing Administration, you can qualify for an FHA loan that gives you competitive interest rates, lower closing costs and a down payment as small as 3.5% with a credit score of 580 or higher. This allows you to purchase a house without a huge 20% down payment that can take years to save for, especially in San Diego. Talk to a lender to find out how much you can afford to buy and then calculate what a 3.5% down payment for that will be.
If you or your spouse is an active-duty military member, a veteran or a surviving spouse, you qualify for this loan. A VA loan comes with a competitive interest rate and you don’t need to put down a down payment. You also don’t need to pay for a private mortgage insurance or have a minimum credit score to be eligible.
Good Neighbor Next Door
Sponsored by the HUD, the Good Neighbor Next Door program provides housing aid to firefighters, law enforcement officers, emergency medical techs, and even teachers from pre-k to kindergarten. The program can allow you to receive as much as a 50% discount if you live in a “revitalization area.” You have to commit to living in the home for at least 36 months.
Fannie Mae or Freddie Mac
Freddie Mac or Fannie Mae loans are government-sponsored entities used through local lenders to offer different mortgage options to benefit low to moderate-income families. They offer competitive interest rates as well as down payments as low as 3%.
FHA Section 203(k)
If you’ve got your heart set on buying a fixer-upper, this is the loan for you! This program allows you to make improvements on your property by giving you the funds you need to do so. You can make a down payment as low as 3% with this program.
Energy-Efficient Mortgage (EEM)
This energy efficient or green mortgage can help you make improvements to your home to make it environmentally friendly. EEM loans are supported by the federal government and are insured with VA or FHA programs. This loan allows you to borrow more money with a smaller down payment so you can make those upgrades in your home like adding double-paned windows, modern cooling or heating systems or even new insulation. If you’re planning on upgrading your home to make it eco-friendlier anyways, you should consider the EEM loan. This will actually save you in the long-run with energy costs!
Ready to Buy Your First Home Now?
Now that you know all about the different first-time homebuyer programs in San Diego, find one that you qualify for! Once you get the approval, the Wolf Real Estate Team is here to help you find a dream home that works with your program. Give us a call or fill out our online form and we will be in contact with you soon.