First time buyer assistance programs in Northern California’s Bay Area

Here are links to the websites describing the first-time buyer assistance programs of several cities in the Bay Area. They are basically programs for qualified first time home buyers offered through city agencies in cooperation with participating lenders. These lenders are willing to loan on a home with part of the downpayment coming from various city, county, state and  economic development agency programs. The goal is to help first time buyers that may not have down payment funds. Buyer qualification is based on income level. Income of all inhabitants, including roommates, must be no higher than 80% of Area Median Income (AMI). That would be $53,000 for a family of two in Oakland. Properties eligible are single family homes, owner occupied, below a certain price point, for example, $503,500 in Oakland, CA. The home buyer must contribute at least 3% of the home value from personal savings, but can borrow up to 75,000 at 3% simple interest with no payments on the downpayment loan until the home is sold, refinanced, or converted to income property. At that point the loan is to be paid back in full with accumulated interest. Of course, the buyer has to qualify for making payments on the primary 80% loan. 

This type of program would enable a first time buyer to borrow up to $75,000 of the purchase price for downpayment. This would be about 15% for a $503,500 home.  The lender would lend around the 80% level and the buyer would ante up a minimum of 3%-5%.

For first time home buyers with limited income and limited downpayment these programs help.

Oakland

San Leandro

Sunnyvale

Pleasanton, Dublin, Livermore Tri-Valley

Santa Clara County

Hercules

First Time California Home Buyer Grants

Home buyer programs sorted by city in California

First time home buyers’ options to get into real estate

I have been discussing with my kids who are in their 20’s the best way to get into homeownership in this buyer’s market. Of course, their mother and I have been encouraging them to establish living on a budget, ideally to live on 70% of net pay, which is about 50% of gross pay. Where does this come from? Well, roughly, federal and state taxes and social security take a chunk of 30% of gross pay. Then set aside 10% of net pay for liquid savings, 10% for investment, 10% for charity. So if Net=.7 x Gross, and Living= .7 x Net, then Living = 49% x Gross.  Living also includes paying student loans and credit card balances. So the message is to continue living like a student and not to radically escalate their expenses until they have a nest egg to leverage themselves into home ownership and other wealth building ventures like an entrepreneurial  side business.

Now,  this is easier said than done. And we have already passed the mark of our kids commenting with amazement and bewilderment on the amount of money withheld from their paychecks. So they are getting to be goal oriented about advancing in their careers and building net worth. It would seem to be a wise move to get into home ownership on the right terms and at the right price in this buyer’s market.

I am going to talk about some options for my kids as first time home buyers. Tomorrow I will highlight some first time home buyer programs offered by various cities. Next week I will discuss creative financing options working with sellers and also lease option possibilities in which the buyer and seller arrive at a win-win solution.