A California city that ranks among the most expensive housing markets in the nation is trying something unique to help its residents afford their first home.
The city of Santa Ana, south of Los Angeles, is now offering interest-free down payment assistance loans to first-time homebuyers.
Under the program, first-time buyers may be eligible to borrow up to $40,000 with 0% interest rate. According to details from the city, the funds are being made available on a first-come, first-served basis.
And the assistance could come in handy, considering how costly it is to buy a home in the Orange-county city.
According to a recent report from the National Association of Realtors, Santa Ana ranks among the three most expensive housing markets in the nation.
The latest quarterly report from NAR, released in February, showed that the median price for an existing single-family house in Anaheim-Santa Ana was $745,200 in the fourth quarter.
That ranks behind only San Jose, where the median price was just over $1 million, and San Francisco, where the median price was $837,500, as the highest in the country.
But buyers that want to use Santa Ana’s down payment assistance program won’t be buying a $745,200 house, as the cutoff price for inclusion in the program is much lower than that.
According to the city, the purchase price cannot exceed $466,000 for an existing home or condo, and $560,000 for a new home or condo.
There are other stipulations as well.
To be eligible for the program, borrowers must be pre-qualified for a first mortgage, and must be a first-time homebuyer. Buyers who have not owned a home in the last three years may also be eligible.
Borrowers must also be prepared to contribute a 3% down payment of their own funds, and must complete a homebuyer counseling program.
Borrowers’ household annual income must be at or below 80% of area median income, as determined by the Department of Housing and Urban Development.
Per the city, the program’s income limits are as follows:
Borrowers must have “acceptable credit history,” according to the city, and the home must be located in the city of Santa Ana.
The home must also be owner-occupied for the life of the loan, meaning investors are not eligible for the program.
According to this report from CBS Los Angeles, the city of Santa Ana is set to discuss the program Tuesday evening at an informal meeting. A follow-up meeting is scheduled for April 11.