San Diego Down Payment Assistance Program - Rates, Limits & Details (2024 Update)
In this post I break down the ins and outs of the Down Payment Assistance program in San Diego.
This is an awesome home loan program for those that make a good to great income, have a pretty decent credit score, yet need some help with their down payment and closing costs.
In this post I go over:
- The loan's main details and highlights...
- Some of the most common questions (and answers)....
- Some secrets of this loan you may not be aware of...
- The (potential) cash out of pocket minimum you can expect...
- The main supporting documents you will be needing...
- The fast, easy, and secure way to apply online...
(Please keep in mind I am approved with 40 +/- wholesale lenders in the state of California and each lender will have different DPA program requirements. Things like credit scores, months reserves, DTI's, etc can vary from lender to lender and the below are used for examples.)
- First things first as some people get confused - all it is - is a loan for your down payment and then you combine it with either an FHA or Conventional loan to equal 100% financing. (Since 99% of the DPA loans I do are FHA I will base this video on FHA to simplify).
- This is a State program and works no matter where you live in San Diego. I know some programs are address or location specific - this one is not. It works anywhere in San Diego county, anywhere.
- You do not need to be a first time home buyer - you can be a first time home buyer or owned before - it does not matter. (And by the way - a first time home buyer is defined as haven't owned a property in 3 years.)
- This is for owner occupied properties - that means you need to live in it - can't be used as a second home, vacation home, investment property, or the like.
- You can get up to 100% financing - that means it covers the down payment and the FHA or Conventional home loan. We can also get up to 5% of a lender rebate to help with closing costs depending on your credit score and debt to income (dti) ratios. (This constantly changes daily so when you apply, and we lock, that's when we know for sure.)
- Generally speaking for this loan buyers closing costs + pre paids are around 4.5% - so, you would need around 1.5% either from the seller, yourself, or a combination of the two.
- This can be an FHA or conventional loan (Keep in mind if we go FHA, and it's a town home or condo, it needs to be in an FHA approved complex - you can see those here).
- I want to repeat that so it's very very clear - if you are going with a conventional loan + DPA = you can buy anything.
- If you go with an FHA loan + DPA - if it's a townhome/condo - it needs to be on the FHA aprpoved list here.
- You need a minimum credit score of 580 (Don't rely on Credit Karma, Credit Sesame, or the Boogie Man. When you fill out an online application, and I run credit, we use that.) This minimum credit score needed has ranged from 580 to 620.
- We can go up to a $977,500 loan amount. The max loan amount has fluctuated between the conforming and max conforming loan amounts - $726,200 to $977,500.
- We can go up to a 55% debt to income ratio with an FHA loan (If you add up your minimum monthly debts on your credit report + future housing payment / average gross income = debt to income ratio)
- There is no max income. (That means you can make $5 million a year and still qualify. It does not matter.)
- This works on a home, town home, PUD, or condo (no manufactured, mobile, 2/3/4 units.)
(Please keep in mind your personal situation might be different and these are used as examples only).
→ Question #1: Is this just for "low income" people
No. As mentioned above you can have an *unlimited* amount of income - it does not matter. And, depending on what you mean by low income - for the most part you can't have a low income and buy in San Diego anyway. This is one of the largest misnomers of the program.
→ Question #2: What zip codes can I buy in for San Diego?
→ Question #3: How do I make payments every month?
You have a loan for your down payment and you make monthly payments. You have a regular FHA or Conventional home loan and you make monthly payments. So, yes, you make 2 separate payments every month.
→ Question #4: How will I pay for closing costs + prepaids?
Closing costs can be paid a few ways. The buyer (you) can pay them out of pocket, we can ask the seller to pay for them, we can potentially use a lender rebate to pay for them, or, a combination of all 3.
Keep in mind at closing not only are there closing costs (lender, escrow, title, notary fees, etc) but there are also prepaids (interest, property tax, homeowners insurance, etc).
→ Question #5: Do I pay back this loan every month or is it "free" or explain it to me.
All you are doing is getting a loan for your down payment, you have an fha (or conventional) loan as normal = you pay them back monthly. This is not "free" money, it's simply a loan for your down payment + a mortgage loan = down payment assistance loan.
(Please keep in mind your personal situation might be different and these are used as examples only).
→ Secret #1: You need to be a first time home buyer.
You do *not* need to be a first time home buyer. This can be your first home. Or this can be your third home. It's not limited to just first time home buyers.
→ Secret #2: You need to have perfect credit as its more risky for the lender.
You do *not* need to have perfect credit. If its just yourself applying you need a 580+ middle credit score. If it's you and a co borrower - we use the lowest middle credit score and that needs to be 580+. (Please note this is always changing and has ranged from 580 to 620 *minimum* to get).
→ Secret #3: This take a long time.
This doesn't take any longer *nor* require any additional paperwork than any other "regluar" home loan. Generally speaking, we can close in 30 days or less.
→ Secret #4: You cant sell or refinance when I want
You can refinance or sell whenever you want like any other property. There's no limits or restrictions. It's your house.
→ Secret #5: If I have used this before I cant use it again
Even if you have used some kind of DPA before, or owned before (or now), or any combination, you are fine.
(Please note this can vary from borrower to borrower so this is just some helpful guidelines: Your own deposit, home inspections, and home appraisal may vary).
Let me be very clear - I 100% understand if you buy with $0 down, we have the lender pay closing costs via a lender rebate (or maybe ask seller to pay some as well), that limits your cash out of pocket - maybe to $0. I 100% get that and so do 99.99% of all agents. But, you *will* have cash out of pocket. Below, are what I am experiencing with clients.
→ Deposit - You should count on putting between 1% to 3% of your sales price - as your deposit into escrow - within 3 days of your offer being accepted. This is totally negotiable between the buyer (you) and the seller. I have helped clients with as little as $500 into escrow. But, keep in mind with the low inventory in San Diego, and lots of offers on each property, that's not a likely scenario.
(Please keep in mind this is 100% refundable - if it's not used for the down payment, closing costs, or escrow impounds - and refunded back at the close of escrow.)
→ Home Inspections - You *should* use a licensed home inspector to check out the property to understand the kind of shape it's in. Do you HAVE to? No, just highly recommended. Depending on if it's a home or townhome/condo it will be somewhere around $250-$750 +/-.
(Please keep in mind - you can choose to inspection anything you want. The roof, septic, plumbing, electrical, pool, spa, foundation, etc.)
→ Home Appraisal - You will need to get a home appraisal on the property since you are getting financing. You pay this directly to the appraiser. This has nothing to do with the buyers agent (me), the listing agent, the seller, the lender, etc. This will be around $600 +/-.
→ My offer to you: If you use my services for the real estate and loan I will credit towards your closing costs at the close of escrow whatever you spent on your home inspection and appraisal as my way of saying "thank you" for utilizing my services.
(Please keep in mind these are the basic documents we will probably need. Depending on your personal situation we may need more or less and will advise accordingly).
- Copy of your drivers license (screen shot is fine)
- Copy of your social security card (screen shot is fine)
- Last 30 days paychecks (you should get these from your employer via email and PDF each time you are paid).
- Last 2 months bank statements - all pages (You just log into wherever you have a bank acount online and save the last 2 months via PDF.)
- Last 2 years taxes and W2's - If you do not have them you can get them from the IRS website here.
- Latest statements if you have anything like: 401(k), retirement, stocks, bonds, mutual funds, etc
- If you are self employed we will need last 2 years taxes and W2's (if applicable) as well as year to date profit and loss sign and dated (you can do this - doesn't need to be a CPA).
- We can potentially need more depending on things like: pay or collect child support, have been divorced, have had a short sale or foreclosure, have filed bankrupcty, have rental properties, etc.
- Fill out my online application at Scotts Loan App.com. If it's just you - then you fill it out just for yourself. If you are married - it's you and your spouse (regardless if they work or not, their income, their credit, etc.) If its you and a co borrower - then you both fill it out.
- Once you are completed I will get an email it was done, and will look everything over to make sure the application is looking good and its a possibility.
- Then, I will email you out all the documentation we will need (cough. Look above) and you will gather all of those and email to me in one email to simplify.
- Once I have received your application completed, and all of your needed documents, I will run your credit, send your way to review, and put together your loan. All of this can be done within a few hours - just dpends on how fast you do the application and provide me the documents I need.
I would love to help assist you with your DPA loan - please feel free to give me a call, text, or use the form below.
Your DPA Insider,