First-time homebuyers in California’s Bay Area struggling to save for a down payment can now apply to receive a loan of up to $200,000 through a new program that seeks to help low-income earners get on the property ladder.
Newsweek contacted Housing Trust Silicon Valley for comment by email on Tuesday.
Why It Matters
The Golden State is one of the most expensive housing markets in the country, with the greater Bay Area reporting particularly high prices. In February, the latest data available on Redfin’s website, the median sale price of a home in California was $832,500, up 6 percent from a year earlier and almost 70 percent higher than in February 2020, when it was $565,400. In both San Francisco and San Jose, the median sale price of a home in February was about $1.4 million.
With home prices still rising and mortgage rates still hovering between 6 and 7 percent, many aspiring homebuyers in California—especially those on lower income levels—have been pushed to the sidelines of the market and have had to put aside their dream of homeownership.
What To Know
The Home Access Program—created by Housing Trust Silicon Valley, a nonprofit in San Jose—offers those trying to buy a home in the greater Bay Area down payment assistance of up to 40 percent of the home’s purchasing price, up to $200,000.
Only first-time homebuyers purchasing a primary residence in Alameda or Contra Costa County can apply. Applicants must have a combined gross household income that does not exceed 80 percent of the area median income for the country where the property is located, considering all adult members of the household.
In both Alameda and Contra Costa Counties, the maximum household income cannot exceed these amounts:
- One-person household: $84,600
- Two-person household: $96,650
- Three-person household: $108,750
- Four-person household: $120,800
- Five-person household: $130,500
- Six-person household: $140,150
Additional requirements include obtaining preapproval from a lender participating in the program before applying; having a minimum down payment of 3 percent of the home’s purchase price; completing a Department of Housing and Urban Development-certified eight-hour homebuyer education class through the designated agency.
Eligible applicants would then be able to receive down payment assistance of up to $200,000, depending on the price of the property they intended to purchase. This can be a single-family home, townhome or condo in one of the two counties.
What Are the Terms of the Loan?
The down payment assistance is a 30-year deferred loan carrying a simple interest rate, which accrues annually. That means there are no monthly payments, but the loan must be repaid at the end of the 30-year term. Interest accumulates on the principal loan amount until the principal is paid off.
The loan is due before that date if a buyer decides to sell the property before the end of the term.
Aspiring homebuyers must put some of their own money toward the down payment. Under the terms of the program, borrowers are required to contribute a minimum of 3 percent of the home’s purchase price.
In Alameda County, the median sale price of a home was $1,117,500 in February, up 1.8 percent year over year, according to Redfin. In Contra Costa County, it was $785,000, up 1.9 percent from a year earlier.
What Happens Next
Aspiring first-time homebuyers who think they may be eligible for the program, can submit an interest form. Housing Trust Silicon Valley said it would respond to interested parties within three business days.
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