Home Buyer Aid Is Geared to Low and Moderate Incomes

Many homeowner assistance programs leave prospective buyers with moderate incomes in a quandary: They earn too much to qualify for assistance but too little to afford the homes they desire.

Now a partnership of county and state agencies is making $100 million in assistance available to help low- and moderate-income residents become homeowners in Los Angeles and Orange counties. The city of Los Angeles is excluded. In some cases, residents earning as much as $94,000 for a family of three or more will qualify.

“It’s an indication of how the cost of housing is going up,” said Gregg Kawczynski of the Los Angeles County Community Development Commission. “With the high housing prices, there’s just a band of people that can’t afford homes.”

First-time home buyers who qualify will benefit by receiving lower interest rates, help with down payments and lower loan costs and fees.

The program is a partnership between the California Housing Finance Agency, which has been dubbed the state’s affordable housing bank, and the Southern California Home Financing Authority, a local agency whose goal is to develop, finance and preserve affordable housing for residents of Los Angeles and Orange counties. “What’s unique is, it’s the first time a local bond issuer has teamed up with the state,” Kawczynski said.

The Southern California Home Financing Authority uses more single-family mortgage revenue bonds than any other local entity in the state. In October, the Los Angeles County Board of Supervisors authorized the financing authority to issue $800 million in bonds over the next three years, of which $100 million recently was issued.

By collaborating with the state bank, the financing authority can reduce costs associated with issuing the bond.

“We’re passing those savings along on the 30-year fixed and some down payment assistance to the end borrower,” said Ken Giebel, a spokesman for the California Housing Finance Agency.

The collaboration also helps residents of Los Angeles and Orange counties to get down-payment assistance available through the state, and provides lower-income residents with a more favorable interest rate than normally would be offered through the state.

The mortgages originated through the bonds are available to people with low and moderate incomes, Kawczynski said, but “people do have to qualify by normal underwriting standards ... looking at their income, total debt as a percentage of income and their credit records.”

In Los Angeles County, excluding the city of Los Angeles, a one- to two-person household with an income as high as $67,680 qualifies; in Orange County, the limit is $82,326. A family of three or more can have a household income as high as $94,675 in Orange County and $78,960 in Los Angeles County.

Qualifying buyers can receive down payment assistance, known as a “soft second.” Those loans are typically 3% of the appraised value of the home or the purchase price, whichever is less, and do not have to be repaid for 30 years, or until the home is sold or title is transferred. The interest rate is 5%.

Those with lower incomes can receive another 3% deferred loan at a 3% simple interest rate.

Through the program, buyers also receive lower mortgage interest rates -- 5.25% for moderate-income buyers and 4.5% for low-income buyers.

Buyers often can end up with 100% financing, said Jerry Smart, chief of the California Housing Finance Agency’s homeownership program. “It all depends on what they can qualify for. Every borrower is different.”

In Los Angeles County, the purchase price of the house generally cannot exceed $298,071 for an existing home or $346,916 for a new home. In Orange County, the cost cannot exceed $352,100 for an existing home or $495,677 for a new home. In some designated census tracts, housing prices can exceed those limits.

The $100 million is expected to generate about 500 loans, made available through local lenders. A list of participating lenders in both counties can be found at www.lacdc.org.

Potential buyers can learn more by calling (323) 890-7249 or visiting www.calhfa.ca.gov.