The CalHome loan amount varies up to $100,000 depending on need.

The Community Housing Development Corporation (CHDC) has an allocation of State CalHome funds available for mortgage assistance to qualified borrowers purchasing homes in Contra Costa County. This funding is administered in accordance with Guidelines adopted by the State Department of Housing and Community Development (HCD). Funds are provided to qualified households in the form of 30-year, deferred-payment second mortgages. The State Guidelines establish certain requirements to achieve the purposes of the legislation, including underwriting requirements. This fact sheet is designed to summarize requirements that will help first mortgage lenders understand the requirements of the CalHome Program.

1.  Income Eligibility – The CalHome borrower household must have a gross annual income not exceeding 80% of county median income for the size of the household. Note that the gross income figure calculated for income-eligibility purposes may vary substantially from the annual income a lender will use to underwrite the first mortgage.
2. First-Time Homebuyers – Borrowers must establish that they have not owned a home in the three years preceding their application for CalHome assistance.
3. CalHome Loan Amount – The CalHome loan amount varies from $5,000 to $38,000 depending on need.
4.  Property – CalHome funds may only be used to purchase a single-family residential dwelling, including condominiums.
5. Appraisal – The home to be purchased must have an appraisal prepared by a California State-licensed appraiser, using comparable sales.
6. Requirements for First Mortgages on CalHome-Financed Home Purchases:
   1. Amount – The CalHome borrower shall obtain a first lien position mortgage loan at the maximum amount consistent with an affordable housing cost according to allowable debt ratios outlined below.
   2. Interest Rates – Rates shall be fixed and shall not be more than the current market rate for the type of property being financed. Temporary or permanent interest rate reductions (buy downs) and adjustable interest rates are prohibited. A CalHome borrower may not pay any discount points to reduce the interest rate on the first mortgage.
   3. Term/Payments – The term of the loan shall be 30 years and any payments must be fully amortized over the term.
   4. Cost of Financing – Fees and charges to the borrower for the first mortgage loan shall be reasonable and must be approved in advance by the CalHome lender. However, yield spread premiums (rebated discount points) and broker’s fees are not allowable.
   5. Impounds – The first mortgage lender is required to collect and manage impound accounts for payment of taxes, assessments and hazard insurance for the entire 30-year term.
7.  Annual Income – For underwriting purposes, the lender shall use standard industry methods for determining the borrower’s annual gross income.
8. Housing Debt Ratio – Monthly housing costs (front end ratio) shall be no less than 30% of the borrower’s gross annual income and no more than 40% of monthly gross income. Not withstanding the above statement, monthly housing costs can exceed 40%, but not be more than 45%, if one or more of the following CalHome acceptable compensating factors are present:
   1. The prospective borrower has successfully demonstrated over a minimum 12-month period the ability to pay housing costs equal to or greater than the proposed monthly housing costs for the property to be purchased. This means successfully handling housing costs plus any other household debt.
   2. The prospective borrower has demonstrated a conservative attitude towards the use of credit and an ability to accumulate savings.
   3. The prospective borrower has substantial non-taxable income.
   4. Previous credit history shows that the prospective borrower has the ability to devote a greater portion of income to housing expenses.
   5. There will be no more than a 20 percent increase in the prospective borrower’s housing expense.
9. Total Debt Ratio – In no case shall the ratio of monthly housing costs plus all other household monthly debt payments (back end ratio), exceed 45%.
10.  Loan-to-Value Limit – LTV includes all liens to be recorded on the property. Under CalHome, the LTV must not exceed 99% of the sales price, plus no more than actual closing costs up to a maximum of 5%. Borrowers must have a minimum of 1% of their own funds in the transaction.
11. Interest Rate – All CalHome loans will be made at an interest rate of 3% (three percent) of simple interest.
12. Consumer Debt – No other borrower debts or obligation (e.g., car loans, personal loans, credit cards) may be paid off through escrow.
13.  Credit History – The borrower’s credit history shall indicate the ability to repay all debts, including:
    1. No credit accounts past due at the time the prospective borrower’s deferred payment loan is recorded;
    2. No outstanding unpaid judgments or involuntary liens at the time the CalHome loan is recorded; and
    3. No bankruptcies, which have not been dismissed prior to recordation of the deferred payment loan or discharged at least 2 years prior to the borrower’s application for financing under the CalHome Program.
14. . Escrow Prohibitions – Cash transactions and oral agreements outside of escrow are prohibited. Cash out of escrow to the borrower is limited to the amount deposited into escrow by the borrower and not needed for any lender- required minimum down payment.
15.  Subordination – Subordination financing may take place only when the new first mortgage being financed does not exceed the amount of the original first mortgage obtained at the time the second CalHome loan was contracted.