The first time home buyer in California is eligible for different mortgage loan programs and some grants as well on the state and city levels. If you have never owned a home before, then you are considered as a first-time home buyer. However, if you have owned a home before, you can still qualify as first-time buyers under different circumstances.
Advantages of first timers
Due to the continuous rising costs of housing in California, most of the times the first-time homebuyers face a down payment crunch, they are more often in need of help with their down payment. The Internal Revenue Service -IRS has granted special policies regarding IRA withdrawals for first-time buyers for use as down payment. In addition, a part of the down payment can also be gifted from a family member.
A huge factor! When in the process of purchasing your first home, the IRS will allow you to borrow against your IRAs account without paying the 10 percent penalty. If you happen to have a Roth IRA, then you can also borrow from this account tax-free after five years.
However, you can use the money for a down payment or closing costs for the principal residence. There is a lifetime limit of $10,000 on these exceptions, and the money must be used within 120 days after withdrawal.
Again, from the IRS standpoint, a first-time home buyer is the one who has not owned a home for at least the past two years. As per IRS guidelines, If the buyer or spouse has owned a home within the last immediate two years, he or she is not considered to be first-time home buyers.
Our top pick for a first time home buyer is FHA loans, and VA loans. FHA loans help first-time buyers not only with the minimum required down payment of 3.5 percent, but their debt to income ratio, which is higher than conventional loans is also a winning factor in qualification of the loan.
On the other side, the VA loan let’s you borrow 100 percent towards the purchase of your first house.
Three Year FHA Rule
The FHA loan guidelines state that any person who has not owned a principal residence in the past three years qualifies as a first-time home buyer. It does not matter whether that home is still there, sold, or foreclosed.
It also does not matter if any of the previous properties one owned has been converted into an investment property.
For qualification purposes, If a person does not qualify on their own, but his or her spouse does, then they both get qualified as first-time home buyers. Isn’t it cool?
California Housing Finance Agency
The California Housing Finance Agency, or CalFHA, also considers people who have not owned a home in the last three years as “first-time home buyers”. In addition, buyers who are in federally designated “target areas” are also qualified for CalFHA loans even if they have owned a home in the past three years.
CalFHA guidelines have income limits that vary by county and family size, as well as the sales price limits. CalFHA borrowers also need to have an education class for home buyers and live in the home for the entire loan term or until the house is sold.
If you have any further questions on California First Time Home buying process and all other qualifying programs, please contact Fast Fund Mortgage at 714-692-2955 or log on to our website www.fastfund2purchse.com and fill up the short form for the quickest response from us.