Buying Your First Home Can Be More Affordable Than You Think

Real Estate Agent with Coldwell Banker Kivett Teeters


As seen in the April 24th, 2008 edition of the Yucaipa News Mirror

Buying Your First Home Can Be More Affordable Than You Think

Special to the News Mirror by Randy Fox

Unless you've been on an extended vacation on some remote tropical island (lucky you), you've heard all the gloom & doom stories about the current real estate market: the prices of homes dropping, people losing their homes due to foreclosure, the mortgage industry crisis and the subsequent tightening-up of lending guidelines...the list goes on...and on...and on.

If you're inclined to listen to Chicken Little ("The sky is falling...") and all the Nay-Sayers, you're missing out on a tremendous opportunity in the real estate market - especially if you're thinking about buying your first home.

Buyer's and Seller's Markets Explained

You've probably heard the terms "Buyer's Market" and "Seller's Market" before; while there is never a "bad" time to buy or sell a home, these terms are used as a generic way of summing up the state of the real estate market at any given time. Looking back to a few years ago when the market was "hot"; it was both a Buyer's Market and a Seller's Market. Home buyers purchased a home, sat on it for a year or two, sold it for a handsome profit, and on it went - for a while, anyway.

It all stems down to supply and demand; just like the stock market, the real estate market is an ever-changing entity and is tied in with economic factors. Key factors that affect home prices include existing inventories of both new construction and resale homes, interest rates, unemployment rates, the penetration of non-traditional home financing options, debt-to-income ratios, mortgage servicing costs, the Consumer Confidence Index (CCI) and more play major parts.

With the current inventory of homes being high and demand not keeping pace, the current real estate market is what most would call a Buyer's Market; what this means to you is that this an excellent time purchase a home.

Should you be thinking about buying your first home, it can be easier and more affordable than you may think. Many programs available for first-time home buyers, including programs requiring little or no down payment.

Benefits of Home Ownership

Purchasing your own home can provide you with many benefits, including:

  • Building Equity
  • Investing in Your Future
  • Receiving Tax Benefits
  • Maintaining a Stable Monthly Payment   
  • Loving Where You Live

If you are willing to put a little elbow grease or "sweat equity" into a home, bank-owned (also known as REO or Real Estate Owned) homes can provide you with the best value for your money. There are examples of currently-listed REO homes on the market listed for hundreds (yes I said hundreds) of thousands of dollars less than what they previously sold for just few years ago. Why? Because banks are in the money business, not the real estate business. Their share holders do not like to see a large amount of homes in the banks' inventories, so the banks offer homes they have obtained through foreclosure/trustee sales at discounted prices in order to get them off their books. It is not uncommon to see banks offering REO properties fro thousands of dollars less than the price they purchased them back for.

As with any home purchase, be sure to have the home thoroughly inspected by a professional home inspection service. The home inspection will uncover needed repairs and will give you an idea as to which repairs you can tackle on your own, and which repairs need to be performed by a professional.

First Time Home Buyer Programs              

Here are some of the programs available to first-time home buyers:

NHF Loan 

This loan for first-time home buyers only can provide you with up to 104% financing, with as much as 4% in the form of a non-repayable grant. There are income and sales price limits. If the loan is underwritten by Fanny Mae (FNMA), the seller of the home can contribute up to 3% of the sales price toward closing costs; if the loan is underwritten by the Federal Housing Authority (F.H.A.), the seller can contribute to up to 6% of the sales price of the home toward the closing costs.

CalHFA Loan

The most popular first-time home buyer program, the CalHFA loan provides 100% financing with one loan.

F.H.A. Loan

While the F.H.A. loan is not a "first-time buyer" loan, it is very first-time buyer-friendly. A 3% down payment is mandatory; however, down payment and closing cost assistance programs are available that can be used in conjunction with the F.H.A. loan. With an F.H.A. loan, the seller of the home can contribute up to 6% of the sales price of the home toward closing costs.

CHDAP Down Payment Assistance Program

This is a down payment assistance program that can be used for 3% financing when combined with the F.H.A. loan, and again, there are income and sales price limits. 

CHAP Closing Cost Assistance Program

This is a closing cost assistance program that can be used for 3% financing and can be combined with both the F.H.A. loan and the CHDAP Down Payment Assistance Program. Income and sales price limits apply.

With the CHDAP and CHAP programs, the seller can't contribute any money toward the down payment; however, the seller may contribute to a non-profit organization such as AmeriDream and the Heart Foundation, who in turn pays the 3% down payment.

Riverside County Down Payment Assistance Program

With this program, up to 20% of the sales price of the home is available in the form of a grant. There are income and sales price limits and not all cities in the county have this program available (email me for a list of approved cities). One stipulation with this program is that the buyer is supposed to stay in the property for at least nine years (in most cases) and sometimes even much longer (depending on the particular program guidelines).

City Down Payment Assistance Programs

There are also down payment assistance programs for the cities of Banning, Beaumont, Highland, San Bernardino and Rancho Cucamonga, subject to a first-come, first-served basis.

Keep in mind that a Home Buyer Education course is mandatory for all first-time home buyer and grant programs; this is usually one eight-hour course conducted on a Saturday.

If you've been thinking about buying your first home, do yourself a favor and look into it further; you never know, you could find yourself in your own American Dream.

Randy Fox is a real estate consultant with Century 21 Best Properties in Yucaipa. He can be reached by email at or by phone at (909) 965-2937. He also has a website,




Comments (4)

Shaun Wren
How are things there. I lived there when I was a kid.
May 06, 2008 11:00 AM
Randy Fox
Coldwell Banker Kivett Teeters - Yucaipa, CA
Hey Shaun, how long ago was that? I've been here since '94 - Yucaipa has really changed a lot; a lot of OC transplants have moved in and bought homes in the new communities like Chapman Heights, etc. Tons of REO's and short sales as a result. Too many people now and only two ways in and out of town; and they're working on expanding the bridge on the Live Oak on/off ramp making traffic congestion a nightmare! Where are you now?
May 06, 2008 11:26 AM
Susan Hilton
CENTURY 21 Beal, Inc. - College Station, TX
Texas Aggie Real Estate, College Station Bryan Texas Real Estate

Checkout our blog and tell me what you think - We are new to this blogging world.

May 06, 2008 03:30 PM
BJ Matson
The Choice Group - Olney, MD

Save Ameridream and other Down Payment Assistance programs
If you haven't done so, go to this website,

It only takes 30 seconds.  This form will go to your local Congressmen and Senators.

HUD should modify to lessen the risk BUT don't get rid of it.  This is one of the last loan programs out there right now that can get buyers into a home with no money.  (They still have to credit and income qualify)

Jul 22, 2008 07:05 PM