CA program offers first-time homebuyers 0% interest down payment loan

California is working to help residents interested in becoming homeowners.

The state launched a program last month to allow first-time home buyers to borrow a down payment at 0% interest.

The Forgivable Equity Builder Loan Program will help buyers with a loan of up to 10 percent of a home's purchase price. It is offered by the California Housing Finance Agency.

To apply, click here.

The loan does not need to be repaid if the buyer stays in the home for 5 years.

"Being a first-time buyer obviously is a little tougher for them because they don't necessarily have the the house to build equity in the last couple of years. So this program is great," said Oscar Wei, deputy chief economist with the California Association of Realtors.

Wei said the state program will increase accessibility to home ownership.

"In California last year, about one-third of homes were sold to first time buyers. So we have a lot of people want to buy, buy houses," Wei said.

The program is only available to Californians whose income is less than 80 percent of the area's median income in the property's county.

It can be used for down payments and closing costs.

"We found that a lot of people have enough money to make a monthly payment on a mortgage, but they don't necessarily have that money saved up to make the down payment," said Eric Johnson with California Housing Finance Agency.

Palm Springs-based realtor J. Ovier Alvarez said with house prices soaring in the valley, first-time home buyers have to compete with cash offers and investors. This program, he said, will level the playing field.

"Yes, it is hard, but not impossible," Alvarez said. "We can make it happen."

State officials said the program is aimed at getting first-time home buyers immediate equity – to build, and eventually be able to pass on intergenerational wealth.

$88 million has been set aside, but officials said demand is high.