How one SLO County couple bought their first dream home
When Mike and Alicia Witman first moved to the Central Coast, they hoped buying a house would be less challenging than it was in Southern California.
“We thought when we moved out of LA, ‘Oh, it’ll be easier up here,’” Alicia Witman said.
But the couple soon realized most homes were out of financial reach — that is, until Alicia’s parents offered to help.
“We just never would’ve gotten there without family contributions,” she said.
The Witmans are part of a growing number of homebuyers in San Luis Obispo County and California who receive family money to help with their down payments.
KPCC-Southern California Public Radio in 2018 analyzed eight years of statewide data from Federal Housing Administration (FHA) loans — government-backed mortgages that require lower down payments and credit scores for low- and moderate-income buyers.
The analysis shows increasing numbers of homebuyers are receiving funds from relatives — from the Bay Area to San Diego.
KPCC provided San Luis Obispo County numbers from 2011 through May 2018, and The Tribune analyzed the remaining FHA loans through May 2019.
The data shows about 27% of local homebuyers who took advantage of an FHA loan received down payment assistance from relatives in 2011. That number grew to 40% by the end of 2018, and reached 41% by May 2019.
A family home in Paso Robles
During the Witmans’ first couple of years in San Luis Obispo County, they rented a home in Arroyo Grande and went to open houses to see what they could afford, “which, most of the time, was very sad,” Mike Witman said.
Alicia, 35, started a teaching program at Cal Poly, and Mike, 37, got a job at the Tri-Counties Regional Center, which provides services for people with developmental disabilities. After getting her credential, Alicia got a job with the Paso Robles Joint Unified School District.
Even with a joint income of about $100,000, the couple began to think they would never be able to buy a house.
“There’s no way we’re ever going to have the cash in the bank to make that down payment,” he said.
When Alicia’s grandmother died, she left an inheritance that allowed her parents to move from Merced to Paso Robles to be closer to their daughter’s growing family.
Then, their Central Valley house sold, making it possible for them to refinance their second house and give Alicia and Mike about $55,000 to put toward a down payment on a $499,000 house just across town.
With additional help from Mike’s family, and a bit of their own money, the Witmans now own a 1,400-square-foot home that’s just the right size for the couple, their 8-month-old son, Elliott, and their two corgis.
And this year, Mike will start a new job teaching video skills to students in the Paso Robles school district. The couple is excited for their opportunity, but know their current situation wouldn’t be possible without the assistance.
“We would never claim, ‘We did this ourselves. We picked ourselves up by our bootstraps,’” Alicia said.
Alicia’s mother, Janet Jordan, said her mother also helped her get started as an adult and buy a house.
Jordan’s mother always emphasized the importance of looking out for the family’s next generation, something she remembered as she had her own children.
“This is a legacy,” Jordan said. “You have to think of not just you.”
Family help for first-time homebuyers
On the Central Coast, first-time homebuyers frequently fit into one of two categories: those who are in the market for fixer-uppers and those who receive financial gifts from family to make their purchases work, said Josh Farris, a Realtor at Atlas Real Estate and Investment in San Luis Obispo.
Some homebuyers might think they need a traditional 20% down payment and haven’t been able to save enough because San Luis Obispo County rentals are so expensive, Farris said.
He said he advises first-time buyers to have a plan for saving and to take on debt in a sensible way.
Farris runs buyers, sellers and investors meetup groups to help connect and educate San Luis Obispo County residents who are interacting with the real estate market.
“Where there’s a will, there’s a way,” Farris said. “You’d be surprised at how many people can save if they have a goal.”
Farris also suggests his clients look for older homes they can fix up and use to maximize their equity.
“I don’t want to have debt that doesn’t give me anything in return,” he said.
He also suggests clients inquire about potential gifts from family members who may want to help them get a leg up.
Michael Poyntz, loan officer at Central Coast Lending in San Luis Obispo, said about four out of 10 of his first-time homebuyer clients receive financial gifts from family.
“The gift funds are helping the younger couples to have the amount of cash liquid to own a home,” he said.
Many of Poyntz’s clients have saved the 3% to 5% down payment they need to get a loan, but buying a house would decimate their savings, he said.
Maintaining a house without help from a landlord requires additional savings, in case an expensive emergency should arise, such as roof damage or plumbing problems.
Homebuyers may have enough money, but relatives’ money can allow them to keep some funds in the bank, Poyntz said.
“If they want to purchase a house, they have to take a pretty significant risk without the gift funds,” he said.
Poyntz also helps his clients use their family funds for things other than a down payment — such as mortgage insurance or lowering their interest rates.
“We’re going to look at the best options for them, tailored to what they want to use the house for,” he said.
From RV living to homeowner
Lindsey and Brad Altman were renting a granny unit in Los Osos when they were told it would be sold at the end of the month.
Instead of combing the market for an affordable rental that would accept their boxer mix, Boomer, the couple opted to live in an RV while they figured out their next move.
“It wasn’t easy to find a dog-friendly place that was nice,” Lindsey said.
Brad, 26, works as a civil engineer, and Lindsey, 25, nannies for a family in San Luis Obispo while running a side business selling handmade macrame crafts. Together, the two earn a little more than $100,000 per year.
The Altmans found a $4,000 RV for sale in San Miguel, overhauled it and rented a parking spot on a 2-acre Atascadero property for $500 per month.
The couple lived in the RV for four months, including the hottest parts of summer: “We were ready to not be there after a few months,” Lindsey said.
Eventually, the Altmans found an 850-square-foot Atascadero house within their $400,000 budget and were able purchase it — Brad’s family gave them $40,000 to put toward the down payment.
“We were super grateful,” Lindsey said. “It was a huge relief. When you own a house, you just have some nice equity and you’re more likely to be able to stay.”
The Altmans’ $390,000 house even came with a third of an acre, so the couple was able to keep their RV and have room for Boomer to roam.
They’ve had to tighten their belts to afford their $2,500-per-month mortgage, but being able to stay on the Central Coast makes it all worthwhile.
“My husband and I both like being outside and hiking and going to the beach, and this is ideal for that lifestyle,” Lindsey said. “It’s just such a gem of a place to live.”