Homeowners can tap up to $50,000 with down-payment grant

By Jeff Lazerson | jlazerson@mortgagegrader.com | MortgageGrader.com | February 17, 2025

Article originally posted in Orange County Register on February 13, 2025

A motherlode of down payment assistance programs is available for California homebuyers.

I’ve counted 347 programs, to be exact.

And you don’t necessarily have to be a first-time buyer for some programs. In today’s column, I’ll highlight a few of the best programs I found.

City National Bank gets top billing, offering $50,000 in grant funds in its Ladder Up program, which borrowers don’t have to pay back. The funds can be used for down payment, closing costs and rate buydowns in a majority Black or Hispanic census track in Los Angeles County.

Borrowers can get a grant of up to $20,000 in “qualifying” census tracts where minorities are in the majority elsewhere in California (as well as New York and New Jersey), according to City National’s website.

“We are dedicated to making the dream of homeownership a reality, and more accessible to the communities we serve,” said Vanessa Montanez, senior vice president and head of community lending at CNB. “Hundreds and hundreds of families have already received grants.”

The program was created as part of a redlining settlement with the U.S. Department of Justice. A department probe found that just 8% of its LA-area mortgage applicants were from majority-Black and Hispanic census tract residents.  The bank and DoJ agreed settlement terms in early 2023.

The program comes with a 30-year fixed mortgage rate ranging from 6.3% to 7%, according to Montanez.

Montanez noted applicants must apply directly with CNB.

Here’s the fine print:

—Applicants do not have to be a first-time buyer, but you can only own one property at the time of closing escrow

—Borrowers must contribute at least 3% of the sales price

—660 is the minimum allowable middle FICO score for all borrowers

—You can use non-occupant co-borrowers regardless of whether they own property. (Think: family)

—The income cap is 300% of the area median income. For example, the L.A. County AMI is $98,200, meaning applicants there can earn up to $294,600 per year and still qualify.

—You can use this program for a rate and term refinance (no cash-out) up to $20,000 in census tracts where minorities are in the majority to pay down the existing mortgage balance, pay closing costs and buy the rate down.

—No private mortgage insurance required

—Maximum loan amounts are the Fannie Mae high balance limits per county. The loan limit in L.A. County is $1,209,750.

—You can use layered financing for closing costs such as local second mortgages offered by municipalities

HSBC grant

Another excellent program I found is directly from HSBC Bank.

As of January, HSBC Bank is offering a $25,000 down payment grant named Opening Doors Grant Program. In addition, homebuyers can get $5,000 in closing cost assistance through a program named Community Works Mortgage Product, according to Leigh Smith, head of the U.S. mortgage division for the bank. “No lien is recorded (for the $25,000),” said Smith. (Which means, the borrower doesn’t owe money to HSBC.)

The Opening Doors fine print:

—You don’t have to be a first-time buyer. You do have to occupy the property as your primary residence.

—This program is for either low-income borrowers or borrowers in a minority-majority census tract.

—You must contribute a minimum down payment of 3%. Certain income level restrictions may apply depending on the property’s location.

—There is no maximum loan amount. Your lowest middle FICO credit score for all borrowers can go as low as 620.

Resources available

If you want to learn what else is available, a great site to use is Down Payment Resource at downpaymentresource.com. The website features 347 assistance programs in California.

The site is very user friendly. I plugged in $100,000 of annual income seeking a $500,000 property. DPR returned 26 results.

Freddie Mac has a site named DPA One that offers more than 700 down payment assistance programs nationwide.

On Feb. 10, CBC Mortgage Agency and its website chenoafund.org announced a down-payment assistance program for 50,000 families. I think it’s worth a look and consideration as well.

My suggestion is to look for the largest amount of “grant funds” first. This means you don’t have to pay the money back.

Freddie Mac rate news: The 30-year fixed rate averaged 6.87%, 2 basis points lower than last week. The 15-year fixed rate averaged 6.09%, 4 basis points higher than last week.

The Mortgage Bankers Association reported a 2.3% mortgage application increase compared with one week ago.

Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $806,500 loan, last year’s payment was $53 less than this week’s payment of $5,295.

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 5.75%, a 15-year conventional at 5.625%, a 30-year conventional at 6.375%, a 15-year conventional high balance at 5.99% ($806,501 to $1,209,750 in LA and OC and $806,501 to $1,077,550 in San Diego), a 30-year high-balance conventional at 6.75% and a jumbo 30-year fixed at 6.5%.

Eye-catcher loan program of the week: A 30-year mortgage, with 30% down, locked for the first 5 years at 5.99% with 1 point cost.

Jeff Lazerson, president of Mortgage Grader, can be reached at 949-322-8640 or jlazerson@mortgagegrader.com. His website is www.mortgagegrader.com.

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* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.