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Help Making the Leap to Homeownership

Assistance* Various government programs provide down payments, low-interest mortgages to qualifying buyers.


Despite seven years of pinching pennies, Andrew Tasker despaired of ever being able to sock away enough money to make a down payment on a home. But just in time for Christmas, he picked up the keys to his very own three-bedroom home in Glendora.

"I still can't believe it," said the 36-year-old manager of a Pomona manufacturing company. "With the help of the city, I was able to get the ball rolling. I learned that [home buying] was not out of reach."

With mortgage interest rates at historically low levels, more and more eager buyers like Tasker are taking advantage of the dozens of government home-buying programs available to those seeking financial and other assistance. Programs specifically designed for teachers, police officers and families of varying income levels are available, if you know where to find them.

Tasker learned about the Glendora First-Time Home Buyers program, for example, after attending a home-buying class at North American Mortgage Co., a division of Washington Mutual in West Covina.

The single Glendora resident, who moved in with his mother several years ago after an accident left him disabled, knew that he could afford the monthly payments on a home, but sought assistance with the down payment. He learned in the home-buying class that he qualified for a loan and was eligible for the city of Glendora's assistance program.

The federally funded program, which provides "silent seconds" to qualified applicants, provides a 30-year, $25,000 loan. During the first five years of the loan, no interest accrues and no payments are made. Thereafter, simple interest accrues at 3% per year. Borrowers do not have to pay back the loan until they sell the house.

Like participants in most home-buyer assistance programs, Tasker's income had to fall within the limits imposed by the city from which he borrowed the money. In Glendora, where home prices are higher than some areas of Los Angeles County, program participants may not earn more than 120% of the area median income. The annual income for a family of four there, for example, cannot exceed $65,400; for an individual, $45,800.

Most home-buyer assistance programs in the Los Angeles set an annual income limit of $43,600 for a family of four, because median home prices there are lower. Income-level requirements vary city to city and county to county.

"The bottom line is that these programs can mean the difference between affording or not affording a home," said Miguel Don, manager of North American Mortgage Co.

That was the case for Marcia Elayne, a single mother who took advantage of the Los Angeles Housing Department's HOMEWORKS! program, after a lifetime of apartment living.

The city program, in partnership with Freddie Mac and participating lenders, currently offers "soft seconds"--interest-free loans--of up to $75,000 to low-income home buyers who need assistance to purchase and rehabilitate homes in Los Angeles.

Under the HOMEWORKS! guidelines, Elayne was able to buy a $150,000 Van Nuys home with the $35,000 the city lent her. She came up with 3% toward the down payment, and a portion of the city loan provided the other 17% of the down. The remainder of the loan was used for rehabilitating the home, a program requirement.

Under the terms of the HOMEWORKS! program, Elayne will pay no interest on the 30-year loan. She will repay the loan in full only when she sells the house, refinances her loan or, 30 years from the onset of the loan, with a balloon payment. To qualify, she had to prove she did not own another home at the close of escrow and that she earned $34,900 or less annually.

"This program was a blessing for me," said Elayne, who works as a clerical assistant for the Los Angeles Housing Department. "I'm the only homeowner in a family of six siblings, so now they can stay with me when they need it, or when they're in transition."

In addition to the HOMEWORKS! program, Los Angeles offers HOMEBUY, which provides down payment assistance for low-income households to purchase newly constructed or newly rehabilitated homes built by developers working with the city of L.A.

Also available are the city's Mortgage Credit Certificate program, which issues certificates allowing home buyers to claim up to 20% of the annual interest paid on their mortgages as a federal income tax credit, and Mortgage Revenue Bond program, or MRB, which offers below-market interest rate loans to qualified borrowers.

The latter program also provides home buyers with a gift of 3.5% of the loan amount to be applied toward the down payment, closing costs or prepaid items. MRBs also may be combined with the city's down-payment and gap-financing programs, if the borrower's income falls below 80% of the area median income.

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