HOME BUYERS FAIR : Finance Options : LOAN SOURCES IF YOU’RE SHORT ON CASH
The government isn’t giving money away, but it does offer some attractive loan programs--especially if you don’t have the 10% or 20% down payment that most lenders require.
* FHA LOANS: More than 17 million people have purchased homes with loans insured by the Federal Housing Administration since the program was introduced in 1934. Although the maximum amount of money that can be borrowed under the program varies by region, the limit is $124,950 in most parts of the Southland.
FHA loans typically require a minimum down payment of about 5%. They’re available to virtually all credit-worthy borrowers as long as the property meets program requirements.
More information about FHA loans can be obtained from lenders, realtors and regional offices of the U.S. Department of Housing and Urban Development.
* VA LOANS: About 26 million veterans of the armed services qualify for loans guaranteed by the Veterans Administration. Most lenders will loan up to $184,000 under the program and no down payment is required, although the borrower must show that he can repay the loan.
Lenders, realtors and the U.S. Department of Veterans Affairs have more information on the VA loan program.
* CAL-VET LOANS: Another avenue of financing for veterans is the Cal-Vet loan program operated by the California Department of Veterans Affairs.
Up to $125,000 can be borrowed under the program, with a 5% down payment and modest $430 loan fee. Borrowers who need a bigger loan often borrow the full $125,000 and then get a second mortgage from a bank for the remainder of the needed financing.
Cal Vet loans currently carry an 8% interest rate. Although that rate can be adjusted, it rarely happens: It’s been changed only twice in the past six years.
More information about the program can be obtained from local branches of the California Department of Veterans Affairs or from the agency’s Sacramento headquarters.
* CHFA LOANS: The little-known California Housing Finance Agency was created by the Legislature in 1975. Its most popular program provides fixed-rate loans as low as 8 1/2%, and down payments can be as low as 5%.
Under a newer program geared exclusively toward low- and moderate-income first-time buyers, the agency will make a low-interest loan and match the borrower’s down payment in order to reduce the size of the monthly payments. The down payment takes the form of a second mortgage, which doesn’t have to be paid back until the property is eventually sold.
Although requirements for both programs vary from one county to the next, many Californians are eligible for CHFA loans. More information can be obtained from the agency’s headquarters in Sacramento or from its Southland offices in Culver City.
One more note: Many cities and counties across California run special loan programs geared toward helping people buy their own homes. Realtors, lenders, nonprofit groups, elected officials and government housing agencies have more details.
