• First-Time L.A. Home Buyer Programs – Help Available



    A Co-op Board Can Derail Your Low Offer

    By Larry Rothman November 30, 2017
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    There is help available for Los Angeles’ first time home buyers. There are two programs, offered through The City of Los Angeles Housing + Community Investment Department (HCIDLA), which provide financial assistance.

    Your income has to be below certain levels to be eligible, but, given Los Angeles’ high real estate prices, which have continued to rise, these programs are worthy of your attention.

     

    First-Time L.A. Home Buyer Programs - Help AvailableImage by Michael /Flickr

     

    Low-Income Purchase Assistance

    The Low Income Purchase Assistance (LIPA) provides loans, up to $60,000, that can be used for items including the down payment and closing costs. You must place at least a 1% down payment from your funds. The program’s monthly loan payments are deferred, with the principal due when you sell, repay your first mortgage (although refinancing your mortgage may be permitted), or in 30 years. In exchange, the city shares part of your home’s appreciation.

    The property (one unit – single family homes, townhouses, and condos) must be located in the City of Los Angeles, and the buyer has to occupy the home as his/her primary residence, and not have a tenant. It must also be inspected by the Los Angeles Housing Department (LAHD), which does not charge for the service. The property must be in satisfactory condition and free of code violations. Any minor repairs have to be made and paid for by either the buyer or seller. The home purchase price for a single-family home must not exceed $498,750, and the limit is $404,700 for condos and townhouses.

    There are household income limits that you have to abide by to be eligible. These range from $50,500 for one person to $95,200 for an eight-person household. Besides being a first time home buyer (defined as not having any ownership in property during the last three years), you must attend an eight-hour Homebuyer Education Class from an approved provider. You must also be a U.S. citizen, lawful permanent resident, or other qualified alien.

    Financial assistance is also available for those earning a moderate income. Those earning between 120% up to 150% of the area median income ($75,701 -178,500) are eligible for up to a $35,000 loan.

    Mortgage Credit Certificate

    The Mortgage Credit Certificate Program (MCC) is federal income tax credit available to certain home buyers. The amount is based on a percentage of mortgage interest paid and reduces your federal tax obligation on a dollar for dollar basis.

    Similar to the LIPA program, you must be a first time home buyer, which uses the same three-year test for not owning a principal residence, unless the home is in a targeted area. There is a 15% tax credit for mortgage interest paid if the home in a non-target area, and 20% for those in a targeted area.

    In Los Angeles, the income limit is $99,600 for one to two-person households and $116,200 for those with three or more. This applies to both non-target and targeted areas.

    The home cannot cost more than $596,978 but climbs to $729,640 if it is in a targeted area.

    Final thoughts

    These are two programs that can provide significant financial benefits. While these are 2017 income limits, you should keep abreast of 2018 changes when these come out.

     


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