Saving for a Downpayment is Hard, But There’s Help
It’s all over the news- on Facebook, your coworkers are talking about it, and you might be experiencing it directly. We’re talking about the increasing rent and housing costs, but stagnant wages.
Here in San Diego, we are seeing an influx of individuals who desperately want to buy their first home but since rent is so high, saving for a down payment is just out of the question. Luckily, the state of California recognizes this problem and has created a state-backed program called GSFA Platinum®.
Surprisingly enough, when we heard about the program, even as real estate agents, were kinda taken back by it. It seemed almost too good to be true.
Enter the GSFA Platinum® Loan
The GSFA Platinum is a program that gives you up to 5% of the first loan amount for closing costs and/or down payment. The kicker – as long as you live in the house for at least three years you don’t have to pay it back. Ever. Even if you move before then, the cost is prorated.
You might be thinking, “Why would the government give me free money that I don’t have to pay back if I live there for at least three years?”
Like we said, we were suspicious too. However, after diving deeper and speaking with Fairway Mortgage’s Karen Buelterman, we were able to better understand the in’s and out’s of this program and got pretty excited to share the info!
For example, GSFA has helped more than 73,600 people purchase homes and has provided over $525.9 million in down payment assistance. That’s pretty impressive. With the average housing costs at a record high in San Diego, this is a great time to learn about what options are out there.
What the GSFA Platinum® Offers
There are a lot of different aspects of the program but together, this is an exceptional and obtainable option. Take a look at the main bullets of the loan below.
- Get up to 5% of the first mortgage amount for down payment and/or closing costs
- You DO NOT need to be a first time home buyer (!!)
- Seen as a silent second mortgage
- Zero interest, and no monthly payments on the silent second
- The loan is totally forgiven after living in the house for three years
- If you need to move or refinance before the three years are up, it is prorated
- Works with VA/FHA/USDA and Conventional loans
- Generous combined borrower income limit of $158,600 in SD County
- Minimum FICO score of 640
Next Steps for the GSFA Grant
As with anything, the first step is education. The best way to get educated on this program and see if it’s right for you is to talk with someone who knows everything about it. This program requires a loan officer to be certified to offer this program. This is where Karen steps in.
She can sit down with you, at no cost or obligation. She will get to know you so she can go over your options and let you know if you qualify for this program.
Once you speak with Karen and get pre-approved, then it is time to start the house hunt with your Dwell Well Realtor. You’ll work side-by-side with experts in both fields the entire way and move into your new home feeling confident that you can afford it. What’s a better housewarming gift than that?
Things to Keep in Mind
In San Diego County, as mentioned above, the limit for combined borrowers is $158,600. However, that limit differs by county so it is important to check the GSFA calculator to see what the limit is near you. For example, the housing market is much higher in the Bay Area, so the Santa Clara County income limit is $226,600.
Additionally, this loan has a strict debt to income ratio (DTI) of 45% to 50%. This is because they want to ensure you’re not doing yourself a disservice and can pay your monthly mortgage payment.
To calculate DTI, divide total recurring monthly debt on your credit report plus the new housing payment (principal, interest, taxes, insurance, mortgage insurance, and HOA if applicable) by the gross monthly income. The number will be expressed as a percentage.
For reference, it’s said that the ideal DTI is 38%. However, this program allows up to 50%, which can help a lot for those who are paying large monthly debts such as student loans.
If you are ready to get started or have a few more questions, do not hesitate to reach out. We want to help you and ensure you’re comfortable with everything before taking the leap into homeownership.
In the end, think of the program this way. You got a student loan to get an education to invest in yourself, so why would you not get a forgivable mortgage loan to invest in your future? Remember, this loan doesn’t need to be paid back after 3 years!
To learn more or get started, contact Karen Buelterman or Tina Dameron via any of the outlets below.
Sales Manager | Fairway Mortgage | NMLS# 633007
Principal Realtor & Founder | Dwell Well Realty | CA DRE 1239211