(LoanSafe.org) – The San Diego Housing Commission (SDHC) has helped thousands of families in the beautiful City of San Diego purchase their first home. They provide deferred loans, down payment and closing cost assistance, and help low – moderate income residents become homeowners. Below we will describe the three different homebuyer programs provided by the SDHC.

SDHC’s main mortgage program is designed for prospective “first-time” buyers in the City of San Diego, and certain surrounding areas. The program also provides assistance to those who have not had ownership in separate “primary residence” within the last three years. If you are looking for your first home in San Diego or surrounding cities, it would definitely be worth a shot to look into these programs.

3% Interest Deferred Payment Loan Program

Eligible homebuyers may qualify for the “3% Interest Deferred Payment Program” which finances up to 17% of the purchase price as a secondary trust deed loan. No payment is required from the buyer for thirty years, unless the borrower obtains a new loan (refinance) or chooses to sell the home before the loan matures. In this case the loan would be due immediately.

Basic facts and requirements for the 3% Interest Deferred Payment Program:

– Income Requirements. Borrower(s) must earn no more than 80% of the Area Median Income (AMI). The SDHC requires any “household member” over the age of 18 to provide their income information in the application.

– First-Time Buyers. Borrower(s) must be first-time homeowners or have not had interest a separate primary residence within the last three years. However, a single parent who previously had interest in another home (while married) may be eligible under certain conditions.

– Eligible Properties. Different types of homes may be eligible for financing including single-family homes, condominiums, and townhomes. The total purchase price of the property cannot exceed $394,250.

– Housing Inspection: A Housing Quality Standards (HQS) inspection is required prior to the close of escrow, and if the home was built before 1978, a “lead-base paint” inspection will also be required.

– Down Payment. A 3% minimum down payment will be required. This down payment must come from the homebuyer’s personal finances or a gift from a family member.

– Loan Amount. The minimum loan amount for this type of loan is $1,000, and can finance up to 17% of purchase price.

– Payment Terms. These loans come with a 30-year term and no monthly payments are required from the borrower. The Deed of Trust carries an “acceleration clause” and under certain circumstances the loan will be required to be paid in full, including: the sale of the home, borrower no longer resides in the home as their primary residence, borrower used false information to obtain the loan, or default on any other loan attached to the property.

– Credit. Borrower(s) must have a minimum credit score of 640.

– Education. Borrower must attend homebuyer education course.

Closing Costs Assistance Grant Program

The SDHC provides a grant program specifically designed to help homebuyers with expensive closing costs. Anyone looking to inquire about this grant must work with a lender participating in the program as they will provide the first trust deed and apply for the grant on the borrower’s behalf. Borrower(s) with 80% AMI may be eligible for up to 4% of the purchase price or appraised value (whichever is less), and cannot exceed $15,000. Borrower(s) with 100% AMI may also be eligible for 4% of the purchase price and is not to exceed $10,000. The minimum grant under this program is $1,000.

Closing cost assistance guidelines:

– Grant Repayment. If the borrower refinances or relocates from the home within the first 6 years the loan must be pad back in full along with 5% interest.

– Loan Amount and Term. The maximum loan amount is $394,250 and qualifying properties include single-family homes, townhomes and condominiums. The mortgage must be amortized over a 30-year period.

Here you can find more information on the closing Cost Assistance Grant Program.
Mortgage Credit Certificate Program

This program provided by the San Diego Housing Commission is an annual income tax credit. Borrowers who qualify under this program may receive an income tax credit of fifteen to twenty percent of the yearly interest paid on the loan, for each year the buyer remains in the home. This will help increase the borrower’s earnings while reducing their federal income taxes.

Tip: Homebuyer may be subject to recapture tax if they sell their residence within 9 years.

The Mortgage Credit Certificate with 20% tax credit:

– Single-family homes, townhomes, and condominiums used as a primary residence.

– Many mortgage types are eligible including FHA, VA, or conventional loans. However, ineligible mortgages include CalHFA, Cal Vet, and negative amortization loans.

– No minimum debt ratios.

– Maximum purchase price is $776,961.

– Maximum income is $45,000 for 1 person households, $51,400 for two person households, $57,850 for three person households, $64,250 for four person households, and so on..

– Under certain circumstances the 20% MCC apply to non first-time buyers and higher income households.

The Mortgage Credit Certificate with 15% tax credit:

– Must be a first-time homebuyer.

– No minimum debt to income or housing ratios.

– Maximum income is $74,900 for 1-2 person families, and $86,135 for 3+ person families.

– Maximum purchase price is $635,696.

2013 San Diego Median Income is $72,300

Erik Sandstrom
LoanSafe's Mortgage Expert
I'm a Senior Loan Officer and LoanSafe mortgage expert. If you need a live rate quote, or need help getting a new mortgage, please call me direct anytime at 619-379-8999.