First Time Homebuyers

The City of Watsonville offers a First Time Homebuyer Program to help low income households purchase their first home.


Anyone who has not owned or held ownership interest in a home or other real estate within the last three years; and households whose annual projected gross income does not exceed the income limits based on size is eligible. The program is funded from various sources. View the current income limits (PDF) by funding source. Homebuyers must be able to provide at least 3% of the sales price toward the purchase of the home and successfully complete a City-approved homebuyer education class.

Home Requirements

  • Must be located within the City limits
  • Cannot exceed maximum allowable sales price for the area
  • Must be on a permanent foundation
  • Must be vacant for a minimum of three months or be owner-occupied prior to offer to purchase
  • Must be able to pass a housing and lead-based paint inspection

Loan Terms

Repayment of the loans is deferred for 30 years at 1% simple interest and must be repaid upon the first of the following occurrences:
  • Home is sold or transferred
  • Borrower ceases to occupy the home as their principal place of residence
  • First mortgage loan becomes due and payable
  • Home is refinanced with cash out
  • 30 years from the loan date
The amount of assistance is based on the lesser of the following:
  • Program funding subsidy limits
  • Affordability gap

Application Process

Prospective homebuyers should start by getting pre-qualified for a first mortgage loan with a lender who is either familiar with or willing to work with the Program. First mortgage loans must be fully amortized over a minimum of 30 years at a fixed interest rate. Once pre-qualified, the homebuyer should start looking for homes within the price range recommended by lender, which should be determined taking into consideration the amount of the first mortgage loan, down payment and our Program limits should you need additional assistance.

After the homebuyer has entered into an agreement to purchase, their lender must contact the Community Development Department, Housing Division to begin the application process. The City will review the application and work with the lender to determine eligibility and complete the transaction.

Additional Information

For more information about the City's Housing Programs, call 831-768-3080 or  submit our Contact Us form.