Federal, State Offer Loan Aid
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.
Most realtors, lenders and mortgage brokers can provide you with information about FHA loans.
You can also get information about the various FHA programs by contacting the regional office of the U.S. Department of Housing and Urban Development, which you’ll find under the “United States Government” section near the front of the phone book.
* VA LOANS: About 26 million veterans of the armed services qualify for loans guaranteed by the Veterans Administration. Most lenders will lend up to $184,000 under the program and no down payment is required, although you must prove that you’ll be able to pay the money back.
Lenders and realtors can tell you more about the VA program. Or, you can contact the local office of the Veterans Administration, which you’ll find under the “United States Government” heading of your local phone book.
* 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 seven years.
More information about the program can be obtained from local branches of the California Department of Veterans Affairs, which you’ll find under the “State Government Offices” heading near the front of the phone book.
Or, you can call the agency’s Sacramento headquarters toll-free, (800) 952-5626.
* 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 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. The agency’s headquarters are in Sacramento, but it has a regional office in Culver City, (213) 736-2355.
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.
