Buying in San Diego can feel out of reach when you look at the cash to close. The good news is you can often layer assistance to reduce your upfront cost. If you have heard about SDHC grants and second loans, you can pair them with the right first mortgage to stretch your budget. This guide shows you how stacking works, what SDHC offers, and the steps to take with a participating lender. Let’s dive in.
What SDHC offers
SDHC provides first-time buyers with a mix of assistance that varies by track and location within the City and participating County cities. Options commonly include deferred second loans and closing cost grants. Examples include low-income tracks with a deferred second that covers a percentage of the price and closing cost grants up to $10,000, and a middle-income City track with a $40,000 deferred loan plus a $10,000 grant in certain ZIP codes. Program amounts, income limits, and price caps change, so start on SDHC’s official First-Time Homebuyer pages for current details and guidelines: SDHC first-time homebuyers.
SDHC assistance is typically a recorded subordinate trust deed and may include a closing cost grant. Repayment for the deferred loan usually comes due when you sell, refinance, pay off the first mortgage, or stop living in the home as your primary residence. Some middle-income options convert to monthly payments after an initial deferred period. Review SDHC program documents to understand your exact repayment triggers and timing: SDHC program overview.
To qualify, you must be a first-time buyer under program definitions, meet income and price caps, complete required homebuyer education, and work with an SDHC participating lender. SDHC often requires a fixed-rate first mortgage and a minimum borrower cash investment. SDHC maintains a current list of participating lenders.
Why stack assistance
Stacking combines your first mortgage with one or more subordinate loans or grants to cover down payment and closing costs. The mix must fit investor and program rules for combined loan-to-value, lien position, and acceptable funding sources. FHA, Fannie Mae, and Freddie Mac all allow certain types of approved secondary financing, but each has limits you must follow. See FHA’s secondary financing rules in the FHA Single Family Housing Policy Handbook 4000.1 and conventional Community Seconds guidance in Fannie Mae’s 97 LTV and Community Seconds FAQs and Freddie Mac’s Affordable Seconds requirements.
One critical rule is that seller-funded down payment assistance is not allowed under FHA and is restricted under many conventional programs. You can still get standard seller credits within allowed limits, but the seller cannot be the source of your DPA. Review this common pitfall in this plain-language overview of seller-funded DPA restrictions.
Popular stacking combos in San Diego
CalHFA first + MyHome + SDHC
CalHFA offers first mortgages paired with the MyHome Assistance Program, a deferred junior loan that can help with down payment or closing costs. In some cases, borrowers add SDHC’s deferred second and an SDHC closing cost grant, subject to lien priority, CLTV limits, and lender acceptance. Always confirm your exact combination with the participating lender and both programs. Learn about MyHome in CalHFA’s program page: CalHFA MyHome and related programs.
Conventional first + SDHC + community seconds
You may use a conventional first mortgage that accepts Community Seconds or Affordable Seconds, then add an SDHC deferred second. In certain cases, a small additional HFA grant may also fit if CLTV rules allow. Fannie Mae’s guidance explains when CLTV can go up to 105 percent for specific products. Review Fannie Mae Community Seconds FAQs and Freddie Mac Affordable Seconds for details.
FHA first + SDHC
Some buyers use an FHA-insured first mortgage with an SDHC second. FHA generally permits approved government or nonprofit secondary financing if it meets documentation and source-of-funds rules. Make sure the lender documents the second lien properly and keeps CLTV within FHA limits. See FHA’s rules in the Handbook 4000.1.
Targeted local grants
At times, small, targeted grants for specific groups may appear in San Diego. These are usually limited and time sensitive. If you see an educator or employer-based program in the news, verify availability and rules before you plan on it. Here is an example of a recent teacher-focused initiative reported locally: San Diego teacher homebuyer assistance coverage.
Step-by-step checklist
Start with an SDHC participating lender. Get preapproved with a lender that appears on SDHC’s list and regularly closes SDHC and CalHFA loans: SDHC participating lenders.
Confirm program eligibility. Check your income against the right SDHC track, your property’s location, and purchase price caps. If you plan to add CalHFA or another HFA, confirm those rules too: SDHC first-time buyer programs and CalHFA MyHome overview.
Complete homebuyer education. SDHC and CalHFA require approved courses. Finish these early so your file is complete when you open escrow: SDHC program page.
Mind the SDHC submission window. SDHC requires applications within a set period after you open escrow, and notes that it can close quickly when documents are submitted on time. Work with your lender to hit every milestone.
Model your stack. Ask your lender to calculate LTV and CLTV, verify allowable lien positions, and document sources of funds. They should confirm investor acceptance in writing using the Fannie or Freddie rules for Community or Affordable Seconds.
Prepare closing documents. Expect recorded subordinate notes or deeds, program agreements showing repayment or forgiveness terms, proof of education, and program approvals. FHA loans require proper documentation of any secondary financing per the FHA Handbook.
Avoid common snags
- CLTV over the limit. Your total financing cannot exceed the limit for your first mortgage product. Conventional options with Community Seconds sometimes allow higher CLTV, but only in specific cases. Check Fannie Mae’s FAQs.
- Disallowed funding sources. Seller-funded DPA is not permitted under FHA rules and is restricted under GSE rules. Review this seller-funded DPA reminder.
- Missing paperwork or late timing. Late SDHC submissions, missing education certificates, or incomplete documentation can derail closings. Start early on the SDHC program requirements.
- Lender overlays. Even if the agency rules allow a stack, your lender or investor can say no. Choose a lender experienced with SDHC and CalHFA and ask for written confirmation up front.
Ready to take the next step?
If you want a clear path to stacking SDHC with the right mortgage, connect with a trusted local guide who understands San Diego programs and timelines. Let’s build your plan, line up the right lender, and move you from preapproval to keys with confidence. Reach out to Janet Cisneros to get started. Hablamos español.
FAQs
Can I combine SDHC with CalHFA MyHome in San Diego?
- Often yes, but it depends on lien priority, CLTV, and lender acceptance; CalHFA’s MyHome is designed to pair with a CalHFA first mortgage, so confirm your exact stack with your participating lender and review CalHFA MyHome guidance.
How much SDHC assistance could I receive?
- Amounts vary by track and location, such as deferred seconds that cover a percentage of price and closing cost grants up to $10,000, and some middle-income options with a $40,000 deferred loan plus a $10,000 grant; check current limits on SDHC’s program pages.
Will stacking increase my monthly payment?
- Many DPA loans are deferred with no monthly payment, so your payment may not rise, but repayment is due at sale or refinance and some options convert to amortizing later; review your terms on SDHC’s site.
Which first mortgage types work with SDHC?
- FHA, conventional, and sometimes VA or USDA can allow approved secondary financing if rules are met, including documentation and CLTV limits; see FHA’s Handbook 4000.1 and conventional Community Seconds guidance.
What causes stacked deals to fall apart?
- Common issues are CLTV above program limits, disallowed funding sources like seller-funded DPA, late SDHC submissions, missing education certificates, or lender overlays; start with an SDHC-experienced lender and watch the SDHC timelines.
