The following answers have been provided by the California Department of Real Estate.
Should I Buy A Home?
In addition to providing you with a place to live, owning a home can provide you with a possible investment
for many reasons including potential equity growth, the stability that comes with having ownership in a community,
and possible tax advantages.
Renting might make more sense for a mobile lifestyle or if you may need to move because of a job change or other factors.
If you do not foresee staying in your home for several years, the amount of equity that you build up over the first year
or two may be lost through selling costs and real estate commissions.
Can I Afford to Buy A Home?
Normally, you need to have enough savings to cover a down payment of 5% to 20% of the purchase price plus an
additional 3% to 7% of this price for closing costs. If you do not have the down payment, you may be able to qualify
for a loan under various government programs that are available.
Before you begin looking for a home decide what you want and can afford. Various factors are considered when a lender
qualifies a purchaser for a home purchase including credit history, job stability and the size of the down payment.
Prior to shopping for a home you may wish to visit a respected lender to determine the loan you can afford.
What government programs are available to home buyers?
FEDERAL PROGRAMS
There are a variety of homebuyer assistance programs sponsored by the federal government including programs that offer down payment assistance for low to moderate income home purchasers; mortgage insurance programs; special home loan programs for veterans, teachers and law enforcement officers; and loans to help revitalize inner-city housing. The Department of Housing and Urban Development (HUD) has established a network of HUD-approved housing counseling agencies that can provide information on federal programs and give you advice on buying a home, resolving credit issues, and other related issues.
STATE PROGRAMS
California Housing Finance Agency (CalHFA): CalHFA was created as the state's affordable housing bank by the State of California in 1975. CalHFA administers several different homeownership programs, all geared toward fulfilling the dream of first-time homeownership for California families. CalHFA offers 30-year fixed rate mortgage loans at interest rates that are typically much lower than conventional home loans, saving borrowers hundreds of dollars on their monthly mortgage payment. CalHFA also provides down payment assistance with deferred payments that do not need to be repaid until the home is sold, refinanced, or paid in full.
Department of Veterans Affairs (CalVet): CalVet offers home loans to eligible veterans at a low interest rate, with low or no down payment, and with low loan fees. CalVet loans can be used for construction or rehabilitation.
Department of Housing and Community Development (HCD): HCD operates several programs that help homebuyers, primarily those with low to moderate income levels. The programs operate for the most part by funding local public agencies and private nonprofit or for-profit entities, which in turn produce affordable housing or make loans and grants to end users at the local level.
LOCAL PROGRAMS
Most cities and counties in California offer homebuyer assistance programs designed to meet the needs of their respective communities. These programs may offer home loans to first time buyers, provide down payment assistance, offer funding for property rehabilitation and community revitalization, etc. Many of the previously described federal and state homebuyer assistance programs are administered by cities and counties. To find out what programs are available in your community, contact your local planning, community development and/or housing departments.
Additionally, many counties in California participate in the Mortgage Credit Certificate (MCC) program. A qualified home buyer can obtain an MCC, which acts as a federal income tax credit. It reduces an individual's income tax and increases net earnings, thus allowing a buyer to more easily qualify for a mortgage. To see if your community has an MCC program, contact your local housing or redevelopment agency or ask your real estate agent, mortgage broker or lender.
FREDDIE MAC & FANNIE MAE
Freddie Mac and Fannie Mae are private "government-sponsored enterprises" that provide financial products and services through banks, savings and loans and mortgage bankers to help low to moderate income families purchase homes, especially in inner-cities, rural areas and other underserved areas. Both Freddie Mac and Fannie Mae offer online tutorials about the home purchase and loan processes.