Lending update is good news for homebuyers

McClatchy-Tribune Information Services

As home prices keep rising, so do the down payments, keeping many San Diegans from taking that step toward homeownership. The good news is that there are many programs to help with a down payment and loan options that donít require the traditional 20 percent down for a home.

Hereís a look at whatís available:

The Federal Housing Administration offers loans that require as little as 3.5 percent down. And the down payment can be a gift from a family member. Borrowers have to meet some requirement such as a debt ratio of no more than 43 percent. The FHA also has lending limits, which is $612,950 in San Diego County.

Conventional mortgages are also available with low down-payment options. Guild Mortgage recently announced a 1 percent down program, joining other lenders such as Quicken Loans, Guaranteed Rate and United Wholesale Mortgage, which all offer 1 percent down for qualified borrowers.

"Whatís really exciting are the down-payment assistance programs or DPAs that are available to help those that might be able to make the payments but just arenít able to save a down payment," said Matt Brady, corporate real estate benefit director and sales manager at Skyline Home Loans (mbrady@skylinehomeloans.com

DPAs are available through the California Housing Finance Agency (CalHFA) and are for first-time homebuyers only. The program offers a deferred-payment loan of up to 3.5 percent, which can be used for the down payment or the closing costs. The program must be combined with a CalHFA loan.

"The Ďsilent seconds,í as they are commonly known, will have to be paid back when the home is sold or after 30 years, but they allow people to get into a home and start to enjoy appreciation and the tax advantages of owning," Brady said.

Special programs for military, teachers and first responders are also available. Be sure to check with your lender to discuss all the options, especially for the first-time buyer.

"Mortgage credit certificate programs, or MCCs, reduce potential income tax liability, creating spendable income, which can be used to help qualify as well as reduce mortgage interest, dollar for dollar, as a tax credit on your U.S. returns," Brady said.

Homebuyers should also be aware of some guideline changes that make it easier to buy a home.

Recent college graduates can qualify for loans using their education as work history, so they donít have to wait two years before they can purchase a home. Also available are programs for professionals such as attorneys and doctors who often work as interns or residents. New guidelines allow them to qualify for loans based on current salaries rather than a two-year salary history. And many of these loans are available for as little as 5 percent down.

Also new is that rental income from accessory dwelling units (ADUs), such as granny flats, can be used to qualify for a loan. Guidelines for credit history have also expanded. Those with limited credit history can establish a credit history using rent and cell-phone bills in place of credit cards and traditional credit lines.

The dream of buying a home may be more obtainable than you think. Check with a qualified lender to see how you can qualify for a home loan.