City of Fountain Valley Down Payment Assistance Program, Down Payment Assistance

City of Fountain Valley Down Payment Assistance Program
What is the First-Time Homebuyer Program?

In an effort to encourage affordable homeownership, the City of Fountain Valley is offering down payment assistance to eligible first-time homebuyers under its First-Time Homebuyer (FTHB) Program. Eligible persons/households can receive up to $50,000 for a one bedroom unit, $100,000 for a two bedroom unit or $150,000 for a three or more bedroom unit. Assistance is in the form of a forty-five year loan with interest and payments deferred for the first ten years of the loan. The FTHB Loan is secured by a second trust deed in conjunction with a first mortgage offered by a participating lender.

How do I/we apply?

The process of applying for participation in the City of Fountain Valley First-Time Homebuyer Program is designed to coincide with the standard mortgage loan processing and approval procedures in place at most mortgage lending institutions. The following steps are designed to serve as a guideline with respect to the sequence of events. While completion of each of the steps outlined below must occur at some point during the process, they may occur in an order other than that illustrated below:

Applicant(s) complete(s) a pre-qualification checklist and return it to the City of Fountain Valley.

Once the City grants preliminary approval, the applicant contacts an approved lender (from the list provided by the City) to apply for and receive pre-approval for mortgage financing.

Applicant meets with a Realtor to locate a single-family home, townhome or condominium located in the City of Fountain Valley. After the Buyer’s offer is accepted, the applicant formally applies to the approved lender for a mortgage loan.

Lender obtains mortgage loan approval for applicant and submits the approved loan package to the City for underwriting of the First-Time Homebuyer Loan. If all underwriting criteria are met, City grants final approval to applicant and prepares loan documents for review and signature. This process takes approximately five to ten working days. The applicant has a maximum of 45 days to complete the purchase after approval of the First-Time Homebuyer loan.

What is an Eligible Property?

Eligible Properties may be single-family detached homes, condominiums or townhomes located within the City of Fountain Valley. Eligible Properties must be inspected by an independent third party inspector at either the buyer’s or seller’s expense. The condition of the property as reported by such inspector must satisfy the standards of the Participating Lender. In addition, all code violations and/or health and safety deficiencies reported by such inspector, and all un-permitted improvements must be corrected and permitted (if applicable) as a condition precedent to funding a FTHB Program loan.

Do I Qualify?

In order to qualify for a FTHB Program loan, an Applicant’s total combined gross household income may not exceed one-hundred and twenty percent (120%) of the area median income for Orange County adjusted for family size as set and adjusted annually by the United States Department of Housing and Urban Development (HUD).

Eligible Applicants must either not have held an ownership interest in real property within the last three (3) years ending on the date the FTHB Program loan documents are executed or must qualify as Displaced Homemaker and must not have had a bankruptcy within the last two (2) years.

Total household liquid assets, excluding the amount necessary for the homeowner’s down payment (minimum three percent (3%)) and closing costs, may not exceed a total of five thousand dollars ($5,000) plus six (6) months of the Participant’s expected housing expense (principal, interest, taxes and insurance). Liquid assets include all funds held in savings, checking, money market, brokerage and trust accounts. Furthermore, equity held in real estate holdings will be considered liquid for the purpose of this program. Assets held in IRA’s, 401(k) and other qualified deferred compensation retirement accounts, and whole life and whole life derivative insurance policies shall not be considered liquid for the purposes of this program.

Finally, in compliance with California Community Redevelopment Law, a participant’s monthly housing costs (including principal, interest, taxes, insurance, homeowner association dues, and a reasonable utility allowance) must be affordable. In general, this means that the participant’s housing cost may not be less than 28% or exceed 35% of gross monthly income. Eligible Applicants must also be legal residents of the United States.