First-Time Homebuyers Program

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The Town of Paradise provides a deferred loan to eligible first-time home buyers. The loan provides a bridge between what borrowers can afford on their own and the amount needed to purchase a home. The loan is secured by a note and a deed of trust on the home. It does not require monthly payments. Repayment of the loan is required when the home is sold; the family stops using it as their principal residence; or title is transferred out of the names of the original borrowers. At the time the loan is repaid, the Agency collects its original loan amount, plus interest or a share of the homeowner's equity.

Click here for Loan Procedure Instructions for Homebuyers    

Lists of Certified Lenders and Certified Realtors are here.

Click here for our HOME First Time Homebuyers Program Guidelines and our First Time Homebuyers RDA Program Guidelines.

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• Must meet income eligibility requirements (See below).

• Must have satisfactory income and credit to be able to qualify for a first mortgage. Must be a resident of Paradise or Magalia for at least one year prior to home purchase. Must be a first-time home buyer, which means the buyer cannot have owned a home in the past three years, unless he/she is a displaced homeowner, or currently owns a home that is dilapidated (i.e., an older manufactured home.)

• Must provide a down payment that equals 2% of the sales price of the home.

• May be required to use a CHFA loan for the first mortgage. Please check with your Lender.

• Must attend a First-Time Home Buyer class.

THE PROSPECTIVE HOUSE MUST MEET THE FOLLOWING CRITERIA:

• Must be located within the Town of Paradise.

• Must be vacant or owner-occupied and must be an existing single-family residence.

• May not have a purchase price which exceeds HUD value limits (currently $304,000.)

• Must pass a lead-based paint inspection.

• Must remain the primary residence of the buyer throughout the loan.

Step 1:

Interested applicants should contact a Certified Lender to determine eligibility. The first lender will request back-up documentation and submit a loan packet to the Town.

The Town lends the difference between what the buyer can afford and the cost of the house. The maximum Town down payment assistance amount is $50,000; however, not all borrowers qualify for the maximum amount.

Step 2:

The Town reviews the Lender's packet for completeness and verifies the information provided.

Step 3:

The Town determines eligibility for the Town's First-Time Home Buyer Program.

The applicant will be required to register for and attend a First-Time Homebuyer's class.

Step 4:

When a suitable home is located, applicant realtor will write a purchase agreement and open an escrow account. (IMPORTANT NOTE: At the time an offer is made to purchase a home, the realtor will cause the seller to sign two documents: (1) "Disclosures to Sellers with Voluntary Arm's Length Purchase Offer."  

The realtor will notify the Town that an escrow is opened and provide a copy of the purchase agreement.

The realtor will schedule all necessary inspections and ensure that repairs are made. The Town requires a pest report with Section 1 repairs made at Seller's expense, a lead-based paint inspection and a standard appraisal. (Note: If a CHFA loan is used, an FHA appraisal is required.) The realtor forwards copies of these documents to the Town.

Step 5:

The Town receives a complete copy of the loan package from the lender and determines if the loan meets all of the requirements of the Town's Mortgage Subsidy Program.

If the loan packet is complete and all requirements are met, final approval will be granted by the Town and a check will be delivered to escrow for the Town's portion of the down payment assistance. (Please allow two weeks for this process.)

At loan closing, the Town will receive an executed copy of the Note, Deed, HUD-1, Notice of Default and any other requested documentation.

The Town’s mortgage subsidy loan is deferred, meaning there are no monthly payments. The home buyer repays the loan in full when the property is sold, rented, or ceases to be the primary residence of the home buyer. The buyer may refinance the loan under certain conditions.

The Town has two programs, depending on funding availability and borrower eligibility:

(1) The Town's HOME First-Time Homebuyers Program carries an interest rate of 3% per year for 10 years. After 10 years, the interest rate converts to zero. At the end of 20 years, if the home buyer still owns and resides in the home, the interest is forgiven; OR

(2) The Town of Paradise Redevelopment Agency First-Time Homebuyers Program carries no interest but the Town receives a portion of the net appreciation, based upon the ratio of the Town's assistance to the original loan. The net appreciation is arrived at by subtracting the original first loan, the Town's down payment loan, and any capital improvements to the property.

For more information about this program, please contact Kate Anderson at the Town of Paradise, 872-6986.

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