FIRST-TIME-BUYER PROGRAM NETS FAMILY'S FIRST HOME.

Byline: GREGORY J. WILCOX

ARLETA - Patricia Galleguillos will wake up this morning in a special place. She's finally home for Christmas.

Her own home in Arleta, a 1,500-square-foot, three-bedroom, two-bath $475,000 castle on Beachey Street. Galleguillos, her husband and their 18-month-old daughter moved in a couple of months ago, just in time for the holidays.

This morning, the whole family will gather at her house, which is all decked out for the season, and fill it with the gleeful sounds of their special Christmas present-opening ritual that can stretch on for two hours.

``It feels good,'' she said. ``I really like this house.''

How long had she wanted her own home? ``Forever.''

Now Galleguillos is where she always dreamed she'd be, thanks to a special state-sponsored loan program for first-time buyers.

They're building equity, but the family is in no rush to tap it.

``I'm not thinking of selling the house. I'm not planning to move anytime soon,'' she said.

She and her husband bought the house with an ``interest-only-plus'' loan offered by the California Housing Finance Agency.

Galleguillos, a first-grade teacher at Langdon Avenue Elementary School, initially tried to use some other loan program tailored to first-time buyers, but always came up a bit short of qualifying.

``I was very disappointed. I had found a really nice house,'' she said.

But the interest-only loan, which stretches 35 years, fit her family's situation.

For the first five years, she only pays the interest, and the monthly payments are manageable enough that she can pay down some of the principal. But that really starts in earnest in 2010.

But since the interest rate is fixed for the entire 35 years, Galleguillos already knows how much her payment will increase.

Ken Giebel, CalHFA's director of marketing, said this is a nice feature in this rising-interest-rate environment.

``There is a step-up,'' he said of the monthly payment. ``But the day you sign, you know what the payment will be when the principal kicks in.''

CalHFA was created in 1975 to act as the state's affordable housing bank. And while it is a state agency, taxpayers don't foot the bills.

The agency makes below-market-rate loans and gets its funds by selling tax-exempt bonds. Participants must meet income and credit requirements. Obtaining a CalHFA loan doesn't take any longer or involve much more paperwork than one from a traditional lender, Giebel said.

``Our programs are not any more difficult to do. They just require about five more pieces of paper,'' he said.

The interest-plus loan program started in March and has been growing in popularity.

And with housing prices still expected to increase, more first-time buyers will likely seek out CalHFA's help.

Since last March 17, the agency has done 5,374 loans; 1,710, or 32 percent, are the interest-only product. That represents $477 million in home sales, he said.

Countrywide Home Loans will join the program in May while Citibank and Chase will come on board next month.

``It will easily be 40 percent of our business after the first of the year,'' Giebel said.

The agency also offers down-payment assistance and it is looking at introducing a 40-year loan.

Information about all the programs, including income limits, is available at www.calhfa.ca.gov.

Galleguillos learned about the agency's programs at a home-buying fair and says making the extra effort was worth it to have the American dream.

And it came with a few surprises. When the family moved in and began painting the house, they discovered it came with hardwood floors. They've restored the living-room floor and are planning to do the rest of the house.

The outside got some special attention, too.

``It's our first house, so we put up some (Christmas) lights outside. We're still decorating the inside. You have to understand, we've been there for two months so we still have boxes (to unpack),'' she said.

For Galleguillos, it's a labor of love.

Gregory J. Wilcox, [phone]

greg.wilcox(at)dailynews.com