The answer is CalHFA-CalPLUS!
Can you really get rid of mortgage interest rates? Perhaps, to a certain extent. On a first mortgage, it's not going to happen, although you could get low home loan interest rates. But on a second mortgage, you could actually end up paying zero interest.
CalHFA-CalPLUS with Zero Interest
CalPLUS is a first mortgage FHA loan that carries a fully-amortized fixed interest rate. Under the ZIP program, a zero-interest junior loan can be combined with the CalPLUS first mortgage. This FHA loan program is intended to help low- to moderate-income families that are well-prepared become California homeowners with low home loan interest rates.
CalHFA-CalPLUS assists with the following:
- A 30-year first mortgage FHA loan combined with the second loan zero-interest program
- Single family dwellings and BMCD-approved condos
- Primary residence homes
- Borrowers with a maximum DTI (debt-to-income) ratio
- Borrowers with a minimum credit score of 640
- 103% combined CLTV (combined loan-to value)
- Tax return and/or W2 filers
Exceptions for first time homebuyers include qualified veterans and borrowers who occupy targeted areas. Targeted areas, as defined by the federal government, are communities where 70% of families earn an income that is at or below 80% of the median income for the state of California. You can find out if you live in a targeted area by visiting http://www.calhfa.ca.gov/homebuyer/information/fdta.htm, or by asking your lender about home loan interest rates.
CalHFA-CalPLUS offers low home loan interest rates for first, long term mortgages. Also deferred payments and zero interest on second long term mortgages.
CalHFA-CalPLUS FHA loan can be combined with CHDAP, ECTP, EEM and MCC. Borrowers, to qualify, must complete and eight-hour homebuyer education course through an eligible homebuyer counseling organization, and get a certificate of completion through that organization. In the case of a mortgage being held jointly, only one borrower needs to complete the course. The course can be taken online at http://ehomeamerica.org/calhfa, and also in person under the auspices of Neighborworks America. For more information, visit the Neighborworks site at http://www.nw.org/network/nwdata/homeownershipcenter.asp.
At present, the sale price of the home can't exceed county limits. For Orange County, the limits are as follows:
- Single Family Home: $625,500
- Two Family Home: $800,775
- Three Family Home: $967,950
- Four Family Home: $1,202,925
There is a waiting period to qualify following credit hardship. For Chapter 7 bankruptcy, it's two years, for Chapter 13 it's one year, and for short sale, foreclosure, or deed in lieu of foreclosure, its three years.
When you visit your lender in Orange County, you'll be expected to provide bank statements, tax returns, pay stubs, and proof of your employment history. Be prepared to answer any questions that may relate to your documentation.
Borrowers who meet the required criteria may very well be able to benefit from reduced mortgage interest rates. Zero interest on a second mortgage is possible assuming that the borrower qualifies under CalHFA-CalPLUS FHA loan guidelines.