I know. Everything is so expensive. This is L.A. – Where people spend more than half of their monthly paycheck on rent. Where another weeks’ paycheck goes to car and related expenses. Where I just payed $11.25 for an order of avocado toast- it was delicious. Most of you are living paycheck to paycheck, whether you are a Millennial or a Gen Xer. You want to save to buy your first place, but it’s just hard to put money aside. Especially if you have a fondness for Gucci purses, but maybe that’s just me.

Rents in Los Angeles continue to increase, driving people to either leave the area or become active investors in this booming housing market. Purchase prices of even entry level condominiums and homes are not going down either. You want to get in on the market and stop throwing money away on rent, but if you are lucky enough to find a $400,000 condo you like, you can’t scrape up the 20% down payment of $80,000. Sure, your relatives may help you out, but we all dread that conversation, and not all families have that kind of money floating around. Our parents and grandparents have their own problems- stretching their money out for retirement.

Well, listen up- first of all, you don’t necessarily need a 20%, or even a 10% down payment. Secondly, there are hundreds of millions of dollars available in California to provide down payment assistance to buyers.  These Down Payment Assistance Programs (DPAs) provide anywhere from $2,000 to $375,000 toward a qualified buyers’ down payment. There are more than 400 programs in the state, with almost 300 still flush with money now, even toward the end of the calendar year. (Some programs are funded at the beginning of the year and run out of money.)  The programs come in the form of first and second mortgages, forgivable gifts/grants, and even tax credits- in some cases, you can use more than one program at a time for your purchase!

A couple of examples:

  1. (GSA) Golden State Finance Authority Platinum DPA Program: Provides a First mortgage plus a grant in the amount of 5% of the mortgage (3% if non-FHA loan). You don’t pay back the grant- Free money!!!  Literally, a gift from the government! For this program, you don’t even need to be a first-time buyer. You do need a minimum FICO score of 640, a maximum income of $84,295 ($107,520 for Freddie Mac loan), a maximum purchase price of $636,150, and a maximum 50% Debt to Income (DTI) ratio. (Determine your DTI by calculating your monthly debt, including anticipated mortgage payment, divide by monthly gross income, and multiply by 100.)

  2. (SCHFA) Southern California Home Financing Authority Program: For First Time Buyers and those who have not owned property in at least 3 years. Provides up to 4% of loan amount for down payment assistance and/or closing costs via non-repayable grant. Minimum FICO score of 640, maximum DTI of 45%, maximum loan amount of $424,100, and max income of $108,120 (for 1-2 person household).

  3. Cal HFA MCC Tax Credit Program: For First Time Buyers and those who have not owned property in 3 years. Allows 20% of mortgage interest to be taken as a dollar for dollar tax credit (with the remainder still taken as a tax deduction).

  4. Private Equity Partnership Programs:  Unison, looking to profit with you on the long- term appreciation of your new home, will lend up to 50% of your down payment in exchange for a percentage of the increase in home value at time of sale. There are no payments on the down payment funds, but they will take approximately 35% (depending on percent of down payment provided) of the appreciation upon sale. If you put money into the house, you can apply for a remodeling adjustment, so that you don’t have to share the appreciation brought exclusively by those improvements. Maximum purchase price of $636,150 and maximum income of $150,000.

 

These programs are just a few examples, and painted in broad strokes. Yes, you can buy property in Los Angeles, even on the Westside, for these prices. At least, for now you can. Work with an experienced Realtor to find the right property, but first- be smart, don’t let this money sit there unclaimed when it could help you buy a home. The California Association of Realtors is an amazing resource to provide you with detailed information on available down payment assistance programs, as well as qualified lenders. Go to www.FindDownPayment.CAR.org and enter some basic information- you can search by areas before you narrow down to a particular property. Some areas have even greater incentives. If you are in education, law enforcement, fire department, in the military, or on disability, there are unique programs just for you.

Don’t miss out on these opportunities that might get you into your first home, and start building your financial future. Take a look at what you qualify for and speak to a lender who works with these programs- you might be surprised. More importantly, you won’t have to move back in with mom & dad or give up your avocado toast to save up.

Disclaimer: This article is intended to be primarily for entertainment purposes, and is not to be considered legal advice.

ABOUT LISA PHILLIPS, ESQ / CA Bureau of Real Estate Lic# 01189413

Lisa Phillips is an active Realtor in the Los Angeles area, with more than twenty years as a practicing real estate broker and attorney. Her unparalleled knowledge of real estate, from local markets and pricing to legal issues and deal-making, has made her a trusted and valuable asset to her clients. In addition to her real estate and business savvy, Lisa is passionate about helping others, and works tirelessly to achieve the best results for her clients. For more information, please visit www.LisaPhillipsRealEstate.com.