Brentwood’s Program to Help with Homebuyer Down Payments
The City of Brentwood has identified a common barrier to homeownership: the challenge of affording the substantial upfront costs of a home loan, such as the down payment and closing costs. Recognizing that many potential homebuyers can manage monthly mortgage payments but struggle to accumulate the necessary funds for these initial expenses, the City has established the Down Payment Assistance Program (DAP). This program is specifically designed to support first-time homebuyers by providing financial assistance to cover these significant upfront costs.
Available Assistance: The DAP offers assistance in the form of a deferred payment loan for income-eligible applicants purchasing their first home in Brentwood. Given the limited availability of funds, the program operates on a first-come, first-served basis. The maximum loan amount available through the program is $10,000. This loan is compatible only with conventional, fixed-rate loans in the first position. The repayment of the loan is deferred until one of the following occurs: the term of the first mortgage is reached, the borrower vacates the property, or the home is refinanced for a larger first mortgage. At that point, the borrower is required to repay the City’s loan along with accrued interest. The interest rate on the loan varies over time, starting at 7 percent and decreasing to 5 and 3 percent, the longer the borrower resides in the home.
Eligibility Requirements: To qualify for the DAP, applicants must meet several criteria:
- Applicants must be first-time homebuyers, defined as those who have not owned a home in the State of California within the last three years.
- The annual household income must be at or below 120 percent of the area median income.
- Applicants are required to contribute at least 3 percent of the down payment from their own funds.
- Completion of a first-time homebuyer education course is mandatory.
- Applicants must obtain a first mortgage through one of the City’s preferred lenders.
It is important to note that while seller-funded down payment programs were eliminated in the Housing and Economic Recovery Act of 2008, state and local government agencies, like the City of Brentwood, are still authorized to assist borrowers with second mortgages and grants. These agencies set specific requirements for borrowers to qualify for their programs, including criteria related to property location, purchase price, and income limits.
In summary, the Down Payment Assistance Program by the City of Brentwood is a crucial initiative for first-time homebuyers in the area. By offering a deferred payment loan to assist with down payments and closing costs, the program addresses a major hurdle in the path to homeownership. Its focus on first-time buyers, income eligibility, and educational requirements ensures that the program supports responsible and sustainable homeownership in the Brentwood community.
