The City of Elk Grove is offering assistance for first-time homebuyers to purchase homes in Elk Grove. Low-interest, deferred-payment loans of up to $59,650 for downpayment and closing costs are available to homebuyers meeting certain income and eligibility requirements.

Loan Highlights

  • 30-year, silent second mortgage
  • 3.00% interest
  • No monthly payments
  • Loan amount based on income and need, up to 20% of purchase price or $59,650 (whichever is less)
  • Up to 3% for non-recurring closing costs

Eligible Homebuyers

  • First-time home buyer (no ownership in previous three years)
  • Will occupy property as principal residence
  • Household annual gross income must be at or below the low- income limit

Eligible Properties

  • Single-family detached, single-family semi-detached, approved condominium, or halfplex
  • Within the City of Elk Grove
  • Must be vacant at close of escrow
  • Maximum price does not exceed Sacramento County median ($539,500 as of May 2026)*
  • Home inspection required

*May fluctuate based on market conditions and date an application is submitted.

2026 Maximum Income Limits

Persons in Household Maximum Gross Income 
1 $73,600
2 $84,100
3 $94,600
4 $105,100
5 $113,550
6 $121,950
7 $130,350
8 $138,750

Application Materials

This program provides deferred- payment loans to income-qualifying households looking to purchase homes in Elk Grove. Please see the attached fact sheet for the terms and conditions of the program.

The City’s loan process has seven steps. More detail on the home selection and subsequent steps will be provided after your preliminary eligibility is determined.

Application

In order for the City to consider your loan request, you will need to complete a City of Elk Grove Homebuyer Assistance Program application. When submitting your application, keep in mind that you must:

  • Submit an original application with all requested paperwork. The paperwork (paystubs, bank statements, etc.) should be copies. The City will not return any paperwork submitted.
  • Make sure to sign and date the application.
  • Attach a lender’s prequalification or pre-approval letter.

Submit your completed application in person or by mail to:

City of Elk Grove
8401 Laguna Palms Way
Elk Grove, CA 95758
Attn: Housing Program Manager

Please complete the application fully, including attaching all required documentation noted on the last page of the application. Applications must be mailed or hand-delivered. Applications will be processed on a first-come, first-served basis. Incomplete applications will not be processed.

Income Eligibility Determination

Once the City receives your application packet, staff will determine if your household meets basic income and
eligibility requirements. The City will rely on the information included in the City’s application and the backup
documentation provided.

Depending on the particular circumstances, the City may request additional information or documentation. Your
ability to respond to the City quickly and accurately is critical. With your lender or agent, you are strongly
encouraged to make a preliminary determination of income eligibility.

After income eligibility has been determined, you will be given a letter from the City confirming income eligibility
and describing the next steps in the process.

Home Selection

Working with your real estate agent, you will select one or more homes on which to make an offer. The home
must be in Elk Grove and within the purchase price limit for the program. When your offer is accepted, your
agent will send the City a copy of the Purchase and Sale Agreement.

Property and Senior Loan Package

Once a purchase offer has been accepted, your agent and lender will need to submit the loan package for the
City’s review. City staff will review the loan request and accompanying documentation for compliance with the
program guidelines. Information will also be reviewed for consistency and accuracy. City staff will work with the
applicant, lender, and real estate agent to resolve any discrepancies.

If the loan request conforms to these guidelines, staff may schedule an inspection of the property. The
inspection will serve as due diligence to verify the information reported in an appraisal and pest inspection as
well as to verify basic health and safety conditions. If corrections to health and safety hazards are required, staff
will inform the buyer and buyer’s agent in writing. Corrections must be made and verified by inspection prior to
funding.

Loan Committee

Once staff has determined that the loan request conforms with the guidelines, the property is eligible, and there
are funds available a request will be made to the Loan Committee. Any facts relevant to the lending decision will
be noted in the request as will any conditions precedent to loan funding.

Loan Commitment and Funding

Once the Loan Committee has approved the loan request and all funding conditions have been met, staff will
prepare loan documents and a request to fund escrow. The escrow funding request will be contingent on
executed loan documents.

Closing

After close of escrow, the closing statement (HUD-1) will be reviewed by staff to confirm the details of the
transaction as approved by the City and that you did not receive excess proceeds.

Contact

Housing Program Manager:
Sarah Bontrager
(916) 627-3209
[email protected]

Funding for this program has been provided by a CalHome grant through the California Department of Housing and
Community Development.
The City of Elk Grove is an Equal Opportunity Lender.

Frequently Asked Questions for Applicants

I used to own a home, but it was foreclosed on. Can I still participate in the program?

The City's definition of a first-time homebuyer is someone who has not owned a home in the previous three years, so if your home was foreclosed on more than three years ago you may qualify. Keep in mind we will look at the date the bank took ownership of your home, not the date you moved out.

I'm not sure how good my credit is. How can I find out?

The best way to find out is to attend a free homebuyer session at NeighborWorks. At the one-on-one session, they will pull a free credit report for you and discuss whether you can probably get a loan given your credit and income. To register, call (916) 452-5356 or visit www.nwsac.org. You could also talk with a lender, who will pull a credit report as part of their qualification process.

Do you look at my gross income or my take-home pay?

We look at gross income. The most common income sources we include are wages/salary, Social Security or disability payments, unemployment, child support, alimony, and many types of public assistance (excluding food stamps). If you have substantial assets, we also include some projected income associated with those.

Can I really get $59,650?

The maximum loan amount is $59,650 or 20% of the purchase price of the house, whichever is less. The actual loan amount is based on what you need to make a particular home affordable to you, and we can't calculate the exact amount until you find a home and we get some information from your lender. The City expects that you will spend between 26% and 32% of your gross income on housing costs.

Does the City have a preferred lender?

No. All institutional lenders who are licensed and in good standing with the State are welcome to participate in the program. The City does not make lender recommendations.

Who has to take the homebuyer education class?

All borrowers who will be listed on the title to the home must take the eight-hour homebuyer education course with NeighborWorks Sacramento. You do not need to take this class until you have preliminary approval from the City to participate in the program.

I would like to put down a large downpayment using my own funds. Can I still qualify?

Probably. The only requirement that the City has related to a maximum amount that you can put down on the house is that you need to have a housing debt-to-income ratio of at least 26% and a total debt-to-income ratio of at least 30%. This means that your first mortgage payment (plus taxes and insurance) needs to be at least 26% of your gross income and your total debt payments (for housing costs plus any credit cards, auto loans, etc.) need to be at least 30% of your gross income. If you have no debt, our subsidy will not be more than what is needed to get you to spending 30% of your monthly income on housing costs.

Will I need to pay back the loan if I refinance?

If you refinance the house, the City may consider subordinating our loan to your new loan. If approved, this would mean that you do not need to start paying back your loan. There are certain circumstances under which the City will consider subordinating (e.g., for you to get a lower interest rate) and when we will not (e.g., if you are trying to take cash out to buy a new car). We have no obligation to approve any subordination request, and if your request is not approved, you probably will not be able to refinance unless you pay off the City loan. However, many lenders will roll the City loan balance into your new loan if there is equity in the property.

I'm pre-approved for a loan of $400,000. Does that mean I can look for a $459,000 house if I get approved by the City?

Probably not. Most lenders calculate your pre-approval amount based on you spending up to about 48% of your gross income each month on housing expenses and other debt. The City will only let you spend up to 36% of your income on housing costs and 42% of your income on total debt (including housing costs). Receiving a City loan may not mean you can buy a much more expensive house, but it will make your monthly payments lower so that you can afford the house you buy.

Frequently Asked Questions for Real Estate Agents

If a home has a 95624, 95757, or 95758 zip code, does that mean it's in Elk Grove and thus eligible?

No. These zip codes contain some areas that are not within the City of Elk Grove's boundaries. The best way to determine if a home is in Elk Grove is to visit the Sacramento County Parcel Viewer and type in the address. If it lists the jurisdiction as “City of Elk Grove,” then it is inside the City. Warning: Google Maps and other mapping websites largely base their information on zip codes and are not a reliable source for determining the jurisdiction of a property.

What is the deadline to get in contract and close escrow on a house?

The deadline for entering into contract is 60 days after the buyer receives preliminary approval to participate in the program. The City can grant an additional 30 days with acceptable justification. Once buyers enter into a contract, they have 45 days to close escrow, although we can grant exceptions for circumstances beyond the buyer's control.

Frequently Asked Questions for Lenders

My borrower has a medical account in collections. Will they need to pay it off in order to receive the City assistance?

Yes, the City requires all accounts in collections or charge off status to be paid, including medical collections. The account will need to be paid through escrow. City funds cannot be used to pay for this.

My borrower took a homebuyer counseling course offered by another HUD-approved agency. Will that count?

Unfortunately, the City is only able to accept certificates from NeighborWorks at this time. The eight-hour homebuyer education course needs to be taken prior to purchase and must be taken in person. Applicants can register for the course or the workshop by calling (916) 452-5356 or visiting NeighborWorks Sacramento's website.

What types of loans will the City accept?

The City will work with conventional, FHA, and VA loans. Please note that the required buyer contribution of 1% is not waived for any loan type.

How much funding is available?

The City received grants totaling $1 million for the program and expects to make around 20 loans.

When is funding reserved?

Funding is reserved at the time the buyer receives a preliminary approval letter.

I calculated my buyer's income and it is below the limit listed. Does that mean they will qualify for the program?

Not necessarily. The City performs its own income qualification using standards that are different from most lenders. The City includes all of a buyer's household income and projects it for the next 12 months using current information. In almost all cases, the City's income calculation is higher than the lender's.

Is there still funding available?

Yes, funding for 2026 is still expected to be available.

Program Summary

Highlights important terms for lenders, real estate agents, and buyers.

Buyer Requirements

Income limit

80% of area median income, as calculated by HCD (see Max Income Limits above).

First-time homebuyer status

No ownership in past three years. Limited exceptions with City approval.

Occupancy requirement

Owner-occupant, primary residence. Loan due if not owner-occupied.

Homebuyer education

8-hour homebuyer counseling course required. Must take at NeighborWorks prior to purchase. Will accept certificates for courses completed in prior three years.

Credit history

Minimum score of 650 for all persons on title. Charge off and collections accounts required to be paid through escrow.

Property Requirements

Eligible types

Single-family detached, single-family semi-detached, approved condominium, or halfplex.

Location

Within incorporated limits of the City of Elk Grove.

 

Tenure

Must be vacant at close of escrow. New homes: construction must be complete at time of offer.

Sales price limit

100% of Sacramento County median ($525,000 as of February 2024)

Inspection requirements

Home inspection by qualified inspector required. Pest inspection required.

Flood insurance

Required if in 100-year floodplain.

Loan Terms

Loan product

30-year “silent second” deferred-payment mortgage.

Use of funds

Downpayment and/or non-recurring closing costs. Use for closing costs limited to 3% of purchase price.

Maximum loan amount

$59,650 or 20% of purchase price, whichever is less.

Loan amount calculation

Actual loan amount calculated on what is needed to make monthly housing cost affordable to buyer. Buyer is expected to spend approximately 30% of gross income on housing.

Interest rate

3% simple. Interest is forgiven over years 11-20. No principal forgiveness.

Position

City must be in second position. Approval of senior debt required.

Deed restriction

None.

Required documents

Loan Agreement, Promissory Note, Deed of Trust, Request for Notice of Default, statutory lending notices.

Special requirements

Buyer eligibility must be confirmed prior to making purchase offer. Purchase offer must include City contingencies.

Senior Loan Requirements

Loan product

Fixed-rate, fully amortizing, 30-year mortgage. Conventional, FHA, VA acceptable.

Maximum interest rate

Current market rate. No temporary rate buydowns.

Maximum CLTV

99%, plus 5% to cover actual closing costs. City assistance limited to 20% of purchase price.

Minimum housing debt-to-income ratio

26%

Maximum housing debt-to-income ratio

32% (up to 36% with compensating factors, subject to City approval)

Minimum total debt-to-income ratio

30%

Maximum total debt-to-income ratio

38% (up to 42% with compensating factors, subject to City approval)

Minimum borrower contribution

1%. Cannot be used toward closing costs.

Gift funds

Allowed. Must be evidenced by gift letter.

Impounds

Taxes and insurance required.

City fee

None.

Contact

Housing

Housing Division

 Email, (916) 478-2254 or fax (916) 627-4800