New (yet old) loan program for 1st time buyers

Hey everyone. I got some information on a loan that will help our first time buyers. It's called the "CalFHA" loan - takes after the old Chaffa loans.

Positives:

• A first time buyer can borrow up to $25,000 for a down payment.
• They can also borrow an additional 3% for the closing costs.
• All this is carried in the background - like a silent second. It is carried on the books as a second loan which is offered at 30 years at 5% simple interest. All payments are deferred until the first is paid off or refinanced, or the CalFHA becomes due.
• It can be subordinated with the CHAP loan and/or the Extra Credit Teacher's Program(ECTP) making a third mortgage.
• The loan is not based on credit scores.
• The first is a fixed rate over 30 years at 4.5% .

Negatives:

• There are income limits but they are very generous (like a family of 3 must earn under $104,621 annually).
• There is PMI (Private Mortgage Insurance) on this loan.
• They require the buyer to pay 1.5 points on the loan.
• And the limit for the loan is only $396,000

There are local lenders doing these loans. Contact me for information on who to call. You can find more information at the following web site: www.calFHA.ca.gov .

Lorraine, Realtor
California Oaks