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New program lets first-time homebuyers in California borrow a down payment at 0% interest

MONTEREY COUNTY, Calif. (KION) A new California program is aiming to give first-time homebuyers a better playing field — offering loan forgiveness — if you stay in a home long enough.

It's called the "Forgivable Equity Builder Loan" through the California Housing Finance Agency (CalHFA). It gives first-time buyers up to 10% of the purchase price of a home, at 0% interest.

The biggest plus — if you live in the home for at least five years, you don't have to pay the loan back.

"It's 20% of the amount per year forgivable. So say the loan is $100,000. 12 months after you get it, 20% goes away. The next year, another 20% and so on for five years," said Sean Connolly, a CalHFA Preferred Loan Officer for Monterey and Santa Cruz counties.

The program is targeted at those who have the income to pay the monthly payments but haven't had a chance to save up enough for a down payment or other costs.

"We're in a very unique area of California. There's a lot of people that are liquidating a ton of equity and paying cash," said Connolly. "This is going to give the first-time homebuyer a little more strength when they're coming to the table."

The program aims to help people like Lisa Moser, who has been trying to buy a home in Monterey County for the past 30 years.

"We love the area. We support our communities here. We just can't afford to buy here," said Moser. "I make my rent fine every month. It's coming up with the down and everything else you need to actually walk into the door. So I rent or I leave the area, and I don't want to leave the area. It's gorgeous. We're blessed here."

To qualify for this new program, announced by Governor Gavin Newsom in April, you need to make less than 80% of the area median income where the property you want to purchase is located.

That would be $64,720 in Monterey County, $89,520 in Santa Cruz County and $118,960 in San Benito County. You can also check the median income for other counties here.

"Come June, those limits are going to rise. So we're not sure how high they're going to go. But the conversation with the borrower is, let's get the paperwork started," said Connolly.

Other Requirements:

  • Be a first-time homebuyer
  • Use the property as a primary residence
  • Complete homebuyer education counseling

But even if you don't qualify for this program, there are others that can help.

"The state has six other programs that they can qualify for because the income limits are substantially higher. Some of them up into the $200,000. So when you get into that price point, it really opens a lot of doors," said Connolly.

How to Apply:

You must contact an approved CalHFA private loan officer, like Connolly, to guide you through the loan and home buying process.

You can search for an approved loan officer in your area here.

You should also have these documents prepared when contacting a loan officer:

  • Pay stubs
  • Bank statements
  • Employment history
  • Previous tax returns

To learn more about this program, visit

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Lisa Principi

Lisa Principi is a reporter at KION News Channel 5/46.


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