New program offers loan forgiveness to first-time Bay Area homebuyers
SAN FRANCISCO (KPIX) -- There's good news for first-time home buyers trying to break into the competitive Bay Area housing market. They now have another tool to help cover the cost of down payments and closing costs if they can commit to staying in their new neighborhood for five years.
The Forgivable Equity Builder Loan from CalHFA allows a new buyer to get up to 10 percent of the property price covered for their first home if they qualify based on the Area Median Income of the county where they plan to move. For most of the Bay Area, 80 percent of the AMI in local counties is $106,880, and in Santa Clara County, the figure is $118,960.
"Homeownership is one of the best ways to build intergenerational wealth, there is a big wealth gap between different groups especially in California," said Eric Johnson, a spokesperson with the California Housing Finance Agency. "In a lot of cases, the rent they're paying, with today's interest rates, is actually is higher than their mortgage payment would be for an equivalent space."
"I think it's an amazing opportunity," said realtor Eli Kuo. "The suburbs have become extremely competitive and as a result, major downtown centers like San Francisco and Oakland, which have plenty of condos, don't have the same amount of attraction."
Kuo says some of the condos he has listed in neighborhoods like South of Market or Mission Bay could be the right fit for these buyers who have the income but have not saved up enough to cover the down payment. He says in suburbs like Daly City, he has seen 200 showings in the first weekend for a "fixer-upper" house. Meanwhile, condos in SoMa might get 50 showings over multiple weekends.
"You can't suddenly add $300,000 above listing, you can only do how much you're pre-approved for," Kuo said. "If they compete in an area with less competition like Downtown San Francisco or Oakland, they may have a chance."
Johnson acknowledges that cash buyers and investors will always be a challenge in such a hot housing market but this tool will hopefully give more people in California the chance to start building generational wealth for their families. He encourages anyone interested in the program to talk to one of CalHFA's preferred loan officers.
"There is no silver bullet for housing because it's going to be something here, something here, something there, something there," Johnson added. "It's possible, you can buy home even with all the bad news that seems to be coming out every day."
To learn more visit calhfa.ca.gov/homebuyer/programs/forgivable.htm.