CALIFORNIA HOME SOURCE
The lease-purchase program is designed to help moderate-income individuals and families with stable incomes overcome the credit and savings barriers to home ownership. The program offers very flexable credit criteria and provides the down payment and pays all the closing costs.
Qualified clients select a home and Cal MAC, a non-profit governmental agency, purchases the home for them by taking on a mortgage, making the down payment and paying all the closing costs. Cal MAC leases the home to the client for 39 months. When the lease is over, the client exercises their purchase option by assuming the existing mortgage with no additional down payment or closing costs.

Basic Eligibility Criteria
tHome must be located in any city or unincorporated area in the following counties:
Alameda, Contra Costa, Marin, Napa, Solano, Sonoma, San Francisco, Santa Clara, or San Mateo
tMaximum home purchase price is $600,000
tNo first time homebuyer requirements
tMaximum income can not exceed 140% of the county median income
home must be occupied as their primary residence during the lease period.
tClient must have source of stable and durable income from a job or business
tSingle qualifying "back-end" ratio of 45%
tCredit reputation must include the following:
*A 580 credit score OR a verified on-time rent history covering the most recent 12 month period.
*12 months of reestablished credit since a bankruptcy or foreclosure if due to financial mismanagement

FREQUENTLY ASKED QUESTIONS
During the lease period do I actually own the home?
No, it is a true lease. The home is owned by the California Regional Mortgage Assistance Corporation (Cal MAC).

Can I take the mortgage interest deduction on my federal taxes during the lease?
No, because the home is actually owned by Cal MAC. However, when you assume the mortgage, you will be the owner of the home and can begin taking the mortgage interest deduction.

Who is responsible for maintenance and repairs during the lease?
You are responsible for normal maintenance and repairs for the home. Most items are covered by a home warranty during the entire lease. You are responsible for calling the warranty company and paying the $35 deductible each time a repair is required. Major repairs not covered by the warranty are handled by California Home Source.

What happens if I don’t make my lease payment on-time?
You risk being evicted. The purpose of the program is to help clients re-establish their credit and to assume ownership of the home. Missed lease payments are very serious. If you know that you cannot make a lease payment on-time due to circumstances beyond your control, notify the Program Administrator before the payment is due. Depending on the circumstances, it may be possible to negotiate a one-time repayment plan. However, missed payments due to financial mismanagement will not be tolerated.

Can I exercise my purchase option early, before the end of the 39 month lease?
You can exercise your purchase option as early as one year after the lease begins. However, if you do so, there is an “early-option fee” equal to a pro-rated portion of the closing cost grant used to purchase your home. If you lease the home for the full 39 months this becomes a grant to you.

What happens if I decided not to exercise the purchase option?
Notify the Program Administrator as soon as possible. Arrangements will be made to cancel your lease and re-lease the home to another client. Your credit reputation will not be damaged.

How much do I have to pay to move in?
California Home Source charges a one percent (1%) administrative fee. This is a non-refundable fee. It is not a security deposit. If you do not exercise your purchase option it is not returned to you.

During the lease period is it possible to have the mortgage insurance cancelled?
No, during the lease period it is not possible to have the mortgage insurance cancelled. However, when you assume the loan and become the homeowner, you are free to contact the mortgage insurance provider to determine if your home is eligible to have the mortgage insurance cancelled.

Can I get lower cost hazard insurance during the lease?
The hazard and liability insurance cannot be changed during the lease. The California Home Source policy provides special coverage required for the program. However, when you assume the loan you can search for lower cost insurance.

Do I get to keep all of the built up equity when I assume the loan?
Yes, but there is one condition. If the value of your home has appreciated (grown) more than ten percent (10%) of the purchase price, California Home Source is required to take back a loan in the form of a lien. This loan does not charge any interest and there are no payments due. In consideration for your continued occupancy and proper maintenance of the home, the balance of the loan is reduced one-third per year. So, in three years the loan is completely paid off! Here is how it might work: Original Purchase Price: $300,000 Home Value When Option Exercised: $345,000 Amount of Agency Loan/Lien: $15,000 Balance of Loan After Three Years: $0

What kind of loan does California Home Source use to purchase my home?
California Home Source takes on a first mortgage equal to either 97% or 100% of the purchase price of the home. The loan is a 30 year, “7/1 Adjustable Rate Mortgage”. This means that for the first seven years the interest rate is fixed. When you assume the loan at the end of 39 months, you will have about four years remaining during the “fixed” period. At the end of the seventh year, the rate will adjust up or down according to market conditions at that time. The rate cannot exceed more than 2% per year and no more than 5% over the life of the loan. It will also adjust this way once a year. Remember though, once you take over the title of the home at the end of the lease, you are free to refinance the loan at any time.

Do I have to pay any closing costs?
No, California Home Source pays all of the closing costs for you (up to 4.5% of the purchase price). If you lease the home for the full 39 months, this is a grant to you that you do not need to reapy. If you assume the loan before the 39 months, a fee will be charged.

How much will my lease payment be?
Your lease payment includes the principal and interest payment of the underlying mortgage that you will assume at the end of the lease. It also includes a monthly mortgage insurance and hazard insurance payment. You may be able to drop or reduce the insurance payments when you assume the loan.