The
CHFA, or "CHAFA" as it is sometimes known, is operated
by the California Housing Finance Authority. It is designed to provide
up to 100% of home loan financing to prospective eligible first-time
homebuyers. Program
available in California only.
Generally,
the loan consists of a standard 97% FHA - CHFA fixed-rate 30-year mortgage
and a 3% CHFA down payment assistance second mortgage, which is also
called a "sleeping" or "silent" second.
The second mortgage is offered for 30 years at 3% simple interest.
All payments are deferred on this second mortgage until one of the
following happens: the CHAFA first mortgage becomes due and payable;
the first mortgage is paid in full or refinanced; or, the property
is sold.
In
order to qualify for a CHFA loan, certain eligibility requirements
must be met. They are:
- Have an annual
household/family income that does not exceed income limits
for the family size and county in which the home is located.
View current Calhfa income
limits (.pdf file)
- Property must be
owner-occupied for the term of the loan or until sold.
- Meet credit, income
and loan requirements of the CHFA lender and the mortgage insurer.
- Be a first-time
homebuyer, which is defined as a person(s) who has not had
an ownership interest in their primary residence during the
previous three years. This requirement is waived if
property is located in a Federally designated Target Area.
- Have sufficient
funds available to meet the required down payment - 3-5% plus
closing costs. Some restrictions apply to gift funds.
- Have the legal
right to permanently reside in the United States.
CHFA
loans are subject to a Federal recapture tax. Recapture is a Federal
income tax that borrowers may have to pay if they sell or transfer
their CHFA-financed home within 9 years.
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