Monterey County Down Payment Assistance and First-Time Homebuyer Programs

Monterey’s breathtaking coastal beauty, rich maritime history, and charming small-town atmosphere. The city’s iconic Cannery Row, once bustling with sardine canneries, now houses shops, restaurants, and galleries, preserving its historical legacy while offering modern amenities. Monterey’s proximity to the Pacific Ocean provides stunning vistas, world-class whale watching, and recreational activities like kayaking, surfing, and beachcombing. Additionally, the area’s mild climate, with cool summers and mild winters, appeals to those seeking a comfortable and laid-back lifestyle. The presence of renowned institutions like the Monterey Bay Aquarium and opportunities in industries such as tourism, marine science, and hospitality further attract individuals and families looking for a unique coastal living experience. Monterey is no bargain, with average home prices of about $1.2 million, so here are some home buying options with down payment assistance.

Down payment assistance programs in Monterey County

Down payment assistance and first time home buyer programs aim to help home buyers make a larger down payment, cover closing costs, or a combination of both. There are several types of home buyer benefits, including grants, forgivable loans, and interest rate reductions and tax credits.

A grant is similar to a scholarship for college. You apply, and if you qualify for the program (i.e. meet all the criteria and the entity still has the money), you can receive funds toward your down payment or for another upfront cost related to your home purchase. 

A down payment loan (or second mortgage loan) is a loan you acquire in order to have the funds for a down payment. Many loan types require a minimum down payment between 3% and 20%. If you don’t have this money saved (many first-time home buyers don’t) then a down payment loan is an option to help you qualify. Some loans are even forgivable if you meet certain requirements like staying in the home for a few years.

Less commonly, some programs come with lower interest rates and tax credits (e.g., mortgage credit certificates) to help lower your monthly payments.

Monterey County Down Payment Assistance Program

The Monterey County Downpayment Assistance Program helps individuals overcome the challenge of hefty mortgage payments by offering first-time homebuyers assistance with downpayment. This program is funded by HOME funds and can only be used to purchase a home in the unincorporated areas of Monterey County.

Assistance type: Forgivable loan

Sponsor: Monterey County

Assistance amount: Maximum HOME subsidy limit, 20% of the purchase price, or amount needed as determined by underwriting criteria.

Purchase price limit: $396,000

Minimum borrower contribution: 3.5% of the purchase price

Eligibility requirements

• Applicants must be residents of Monterey County and first-time homebuyers.
• This program is available only to those whose annual household income falls at or under 80 percent of the AMI for Monterey County.
• Applicant must purchase a modest residence, at most three bedrooms, two bathrooms, and a two-car garage.

Statewide down payment assistance programs available in Monterey County

CALHFA Homeownership Program

The California Housing Finance Agency (CALHFA) provides assistance programs for low- and moderate-income first-time homebuyers to help with down payments and closing costs. The program offers several options, like the MyHome Assistance Program, which offers deferred FHA loans of up to 3.5% of the purchase price. CALHFA assistance can also be used alongside the Dream For All Conventional first mortgage.

Assistance type: Deferred payment loan

Sponsor: CALHFA

Assistance amount: 3.5% of the purchase price for FHA loans and 3% for conventional loans

Minimum borrower contribution: None

Eligibility requirements

• Applicants must meet the credit requirements, CALHFA income limits, and loan requirements set by an approved lender and mortgage insurer.
• The property you purchase must be your primary residence.
• Applicants must complete Homebuyer Education Counseling and obtain a certificate of completion through an eligible homebuyer counseling organization.

GSFA DownPayment Assistance Program

The Golden State Finance Authority Downpayment Assistance programs are assistance loans that help homebuyers with the down payment and closing costs on the purchase or refinance of a primary residence in California. GSFA offers platinum and golden assistance opportunities to help you purchase a home sooner than you thought possible. This loan option can be combined with the Mortgage Credit Certificate tax credit.

Assistance type: Deferred forgivable loan, Second mortgage

Sponsor: Golden State Finance Authority

Assistance amount: Financial assistance up to 5.5% of the First Mortgage Loan amount

Minimum borrower contribution: None

Eligibility requirements

• Financial assistance up to 5.5% of the First Mortgage Loan Amount
• FICO scores as low as 640 can qualify, and DTIs up to 50% are allowed in some circumstances.
• Various First Mortgage Loan types are available to fit the homebuyer’s needs, including FHA, VA, USDA, and conventional financing.

Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.