A new California state loan forgiveness program, Forgivable Equity Builder Loan, is trying to bridge the gap between first-time homebuyers and affordability. This program is for working families or people who earn enough to pay a mortgage but don’t have enough for a down payment.
Eligible first-time homebuyers can borrow up to 10% of the purchase price of a home for a down payment or closing costs and debt forgiveness if they occupy the home for five years .
There is a zero percent interest rate on the loan which will be forgiven 20 percent each year.
To qualify, you must meet a few requirements; be a first-time home buyer, earn 80% or less of the county median income, and spend only 45% of that monthly income on expenses.
To break this down a bit further, the qualifying income in San Luis Obispo County is around $78,000. If you divide that by 12 and take 45% of that number, you get roughly $2,900, which is the monthly spending limit to qualify for the program. These expenses include loans, car payments, credit card bills, etc.
Rene Martinez, a qualified CalHFA loan officer, tells KSBY that this program probably won’t help many people locally in San Luis Obispo County just because of financial caps.
“You can see where that may not help a lot of people, but if there’s someone who’s below that income level and has no expenses, which happens, they would qualify for a mortgage. pretty decent,” Martinez said.
To learn more about this program, you can go to the CalHFA website where they have a link to qualified loan officers who will guide you through the application process.