NOVICE BUYERS, COME ON DOWN.

Byline: GREGORY J. WILCOX Real Estate

There might not be any free lunch but there certainly is some free money floating around for cash-strapped prospective home buyers in Los Angeles and Ventura counties.

Los Angeles County has a down payment assistance program backed by mortgage revenue bonds.

In Ventura County, it's called the Fresh Rate Program, also known as the Down Payment Grant Program, and it's a tad more liberal in some respects than other aid programs because it helps the entry-level and move-up buyer.

``It's a great program,'' said Dan Bonfiglio, senior vice president at Pacific Partners Mortgage in Tarzana, one of the participating lenders. ``It hits a nerve for anybody (who) is coming into the housing market for the first time.''

One of the biggest obstacles entry-level buyers face, especially in these times of rising prices, is putting together the down payment, even though 20 percent of the home's purchase price is no longer the norm, Bonfiglio said.

Three percent down and even less are common these days, so these programs can be a deal maker.

And it can end up benefiting sellers, too.

The Fresh Rate program was created though a $25 million pool put together three years ago by a Wall Street investment group.

Even though the money can be free to the end user, the investors recover their stake by slightly higher interest rates on the loan, Bonfiglio said.

Here's how this program works.

The grant amount is equal to 4 percent of the first trust deed after factoring in a 3 percent down payment.

Then the grant is applied to the down payment and closing costs.

But closing costs typically can exceed what's left of the grant. The buyer then asks the seller to pick up all the closing costs.

And sellers have reason to say yes, notes Bonfiglio. He considers the market to be made up of two kinds of buyers: first timers and investors.

Investors want to pay below market, typically 5 percent to 10 percent.

Fresh Rate participants are encouraged to bid the asking price and sometimes a little more.

``So by paying closing costs they net more money in the long run than if they went with the investor offer,'' he said of sellers.

The grant is actually a 10-year, interest-free loan. But if it is not repaid after 10 years, it's forgiven, Bonfiglio said.

Of course there are strings. To be eligible you cannot earn more than 120 percent of the median income in the area in which you live.

And if you sell the home before 10 years you have to pay back a pro-rated amount remaining on the grant.

This program is ideal for people who don't have money for a down payment or have some savings but want to pay down debt or just use what money they have for home improvements.

In Los Angeles County, buyers can get a down payment grant equal to 3.5 percent of the home's value.

And the interest rates are slightly lower than the Fresh Rate program, said Gregg Kawczynski, manager of housing development and preservation for the Community Development Commission of the County of Los Angeles.

The program is offered in conjunction with Orange County.

In addition to the grant, buyers get an interest rate that is one half or one percent below market rates, he said.

``We do with Orange County about 700 loans a year and that seems sufficient for demand,'' Kawczynski said.

Additional information about this program can be obtained by calling [phone].

Bonfiglio will offer a class on the Fresh Rate program and other assistance programs on March 3. It starts at 10 a.m. at the Ventura County Area Housing Authority office, 1400 W. Hillcrest Drive in Newbury Park.

To register, call [phone].

It could be time well spent.