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The mortgage game

More people and more homes now can qualify for below-market-rate mortgages from the California Housing Finance Agency.

That's because the agency recently raised the amount it will loan families to purchase homes in the Northern San Joaquin Valley. It also increased its income eligibility requirements, so now more families can qualify to borrow the state's money.

Stanislaus County families, for instance, now can earn up to $76,160 a year, and they're allowed to buy homes worth up to $525,090.

That wasn't the case a few years ago, when the state agency set earnings limits and home price limits so low that few of the valley's residents could qualify for any of its lending programs.

"Now is a fantastic time to look at our loan programs," said Eric Johnson, spokesman for CalHFA.

The state agency funds loans by selling mortgage revenue bonds to investors. Because investors don't have to pay income taxes on earnings from those bonds, the agency gets the funds at relatively low rates.

Those low rates are passed on to California home buyers through various discount mortgage programs, primarily for first-time buyers.

"We try to keep our rates 0.5 percent to 1 percent below the market rate for mortgages," Johnson said.

Currently, it offers 30-year, fixed-rate loans with rates as low at 5.125 percent.

Johnson said the agency has plenty of money to offer qualified buyers.

"We would love to make loans until the cows come home," Johnson said. "But a lot of people don't know about us."

That's partly because only select California lending agencies are allowed to process CalHFA loans, so other lenders may not tell borrowers they exist.

All the agency's loans have fixed interest rates, and they are offered for up to 100 percent of a home's value. Some of the lending programs offer an additional 3 percent loan to cover closing costs.

First-time buyers

The loans primarily are offered to first-time buyers and to those who have not owned a home for at least the last three years.

To qualify for these home loans, borrowers with three or more people in their family must have annual household incomes of no more than $76,160 in Stanislaus County, $73,715 in Merced County, $79,940 in San Joaquin County, $75,880 in Tuolumne County, $81,340 in Calaveras County, or $73,715 in Mariposa County.

CalHFA mortgage rates generally range from 5.125 percent to 6.25 percent, depending on the lending program and income level.

For low-income residents, such as Stanislaus County couples earning $39,168 or less, mortgages are offered at lower rates.

There are limits on the price of homes that can be purchased with the loans.

The limit for homes is $429,619 in Stanislaus, San Joaquin and Calaveras counties, $424,400 in Merced County, $393,750 in Tuolumne County and $370,532 in Mariposa County.

Higher lending limits, however, are allowed for homes purchased in certain targeted neighborhoods.

For instance, loans up to $525,090 can be borrowed for homes in certain parts of downtown, west and south Modesto. Parts of Turlock, Merced, Los Banos and Winton also qualify for the higher lending limits.

All the agency's loans are for owner-occupied homes only, not for investment property. Borrowers also must be U.S. citizens or meet specific qualifications for those who are not citizens.

To comment, click on the link with this story at Bee staff writer J.N. Sbranti can be reached at 578-2196 or