California Down Payment Assistance

PROGRAM HIGHLIGHTS

PROGRAM SUMMARY

A Mortgage Credit Certificate (MCC) entitles qualified home buyers to reduce the amount of their federal income tax liability by an amount equal to a portion of the interest paid during the year on a home mortgage. This tax credit allows the buyer to qualify more easily for a loan by increasing the effective income of the buyer. The Riverside County MCC Program provides for a fifteen percent (15%) rate which can be applied to the interest paid on the mortgage loan. The borrower can claim a tax credit equal to 15% of the interest paid during the year.

Since the borrowers taxes are being reduced by the amount of the credit, this increases the take-home pay by the amount of the credit. The buyer takes the remaining 85% interest as a deduction. When underwriting the loan, a lender takes this into consideration and the borrower is able to qualify for a larger loan than would otherwise be possible. The following table illustrates how a MCC increases a borrower’s “effective home buying power”

PROGRAM DETAILS

Maximum Benefit:  Federal Income Tax Credit equal to 15% of mortage interest paid during year 

Maximum Purchase Price:  Outside Target Areas - $429,620 / Inside Target Areas - $525,090

Income Restrictions:  Based on Target Areas and Number of Persons in Household

Payments / Recapture:  The MCC is in effect for the life of the loan as long as the home remains the borrower’s principal residence. The MCC is not transferable to a new loan when refinancing, nor can it be assigned or transferred to a new buyer or another home.

In addition, the MCC Program includes a nine year recapture provision which provides for a return of tax credits taken if the property ceases to be the borrower’s primary residence within nine years from the close of escrow. The amount of tax recapture is determined by formula, and provided to the borrower at the time the application is taken.  After expiration of the nine year period, the borrower may dispense of the property without incurring penalty, but would lose the future benefits of the MCC.   

Eligible Properties:  The residence purchased in conjunction with a MCC must be the borrower’s principal residence and may not be used as a business or vacation home.  The home may be a detached or attached single family home, condominium unit, a co-op unit, or a manufactured home on permanent foundation (new or re-sale).   

Eligible Cities/Areas:  All Unincorporated Areas of Riverside County and within the City Limits of the following jurisdictions:

Ineligible Cities/Areas:   Please note that the following cities are not participating in the County’s MCC Program and MCC’s cannot be issued to purchasers of homes located within the City Limits of these cities:

·        Coachella

·        Palm Springs

·        Indian Wells 

·        Rancho Mirage

HOME BUYER COMMENTS -  If you are a home buyer that has experience with any of these programs.  Please post comments for the benefit of other First Time Home Buyers. 

PROGRAM HIGHLIGHTS

PROGRAM SUMMARY

Second mortgage loans up to 25% or $105,000 (whichever is less) will be available to first-time home buyers with incomes up to 160% of area median income (AMI).

The 30-year amortized loans will have an interest rate approximately 1% below the market rate for first mortgages. (Current second mortgage rate is 5%.) The OCHT will work with a variety of financial institutions to provide the first mortgages and allow additional subsidies from city, county and state government or other programs that the borrower may qualify for to leverage OCHT funds

Down payment assistance loans of $8,000 will be made available to borrowers who are first-time buyers in Orange County or current Orange County homeowners who will reduce their commute to their place of employment by 30 miles a day. To qualify for this assistance the borrower(s) must have incomes at below 140% of the AMI. The down payment assistance loan carries a 1% interest and is payable in full on the maturity date of the first mortgage or upon any sale, transfer, assignment or refinancing of the first mortgage. There is no prepayment penalty.

PROGRAM DETAILS

Income Restrictions:  Family must meet Orange County income limits (160% of Countywide Median):

                              INCOME GUIDELINES

        Family size                                           Maximum Income

1                                                          $ 88,144

2                                                          $100,736

3                                                          $113,328

4                                                          $125,920

5                                                          $135,994

6                                                          $146,067

7                                                          $156,141

8                                                          $166,215

Eligible Properties:  Single-family detached homes, condominiums, and town homes are eligible

Eligible Cities/Areas: Family must purchase in Orange County

Program Flyer:  Down Payment Assistance Guidelines - PDF

HOME BUYER COMMENTS:  If you are a home buyer that has experience with any of these programs.  Please post comments for the benefit of other First Time Home Buyers.