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The homebuying process can be daunting, not to mention expensive. That's why the California Housing Finance Agency, or CalHFA, offers several loan programs to help qualified first-time home buyers get a mortgage.
You may also benefit from a national loan program that features low credit score or down payment requirements. Explore all the options for buying your first home in the Golden State.
National first-time home buyer programs
Offered by most lenders, these national loan programs are always worth consideration, especially if you need flexible credit requirements or low down payment options.
Conventional mortgage
Best for:
Low down payments, limited mortgage insurance premiums
What you need to know:
A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.
VA loans
Best for:
Military, low down payments
What you need to know:
The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.
FHA loans
Best for:
Low credit score, low down payments
What you need to know:
This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.
USDA loans
Best for:
Low down payments, rural
What you need to know:
A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.
CalHFA highlights and eligibility requirements
If you haven’t owned and occupied your own home in the past three years, you’re considered a first-time home buyer in California, and may want to choose one of these CalHFA programs as a more affordable path to homeownership.
» MORE: Tips for first-time home buyers
Highlights
Down payment and closing cost assistance available for low- to moderate-income borrowers
Some condos, manufactured homes and properties with guesthouses or in-law quarters allowed
Eligibility
Property must be located in California and be the borrower’s primary residence until it’s sold or refinanced
In most cases, borrowers must be first-time home buyers and U.S. citizens, permanent residents or qualified aliens
Must have a minimum credit score of 660
Must meet all income and sales price requirements of the lender and mortgage insurer
Must take an approved home buyer education course and obtain a certificate of completion
Leaseholds/land trusts and co-ops not permitted
Property must be 5 acres or smaller in size
There may be additional program-specific requirements
» MORE: Compare CalHFA mortgage lenders
CalHFA first-time home buyer loan programs
MyHome Assistance Program
Best for:
Low income, down payment assistance, closing cost assistance
What you need to know:
This is a deferred-payment subordinate loan that low- to moderate-income first-time home buyers in California can use to make a down payment or cover closing costs when taking a CalHFA mortgage loan. “Subordinate” means it doesn’t have to be paid until the home is sold, refinanced or paid off.
CalHFA Zero Interest Program
Best for:
Closing cost assistance
What you need to know:
This program can make CalPLUS Conventional and CalPLUS FHA loans even more affordable by paying a portion of your closing costs. The CalHFA Zero Interest Program provides up to 3% of the total loan amount in the form of a no-interest second loan. Payments on a CalHFA Zero Interest Program loan are deferred as long as you live in the home, but you’ll be required to pay it back in full if you sell, refinance, transfer the title to someone else or default on the loan.
Summary: 2021 CalHFA first-time home buyer programs
MyHome Assistance Program for assistance with down payment and closing costs.
CalHFA Zero Interest Program for closing cost help on CalPLUS Conventional and CalPLUS FHA loans.
Now that you've got a general understanding of the first-time home buyer programs available in California, it’s time to dig into specifics. For full details on any of the programs listed above, visit the CalHFA website.
CalHFA doesn’t review applications or lend money; mortgage decisions are made by its network of preferred loan officers and approved lenders. These lenders may have their own rules about income limits, credit scores and eligible properties. If you’ve found a first-time home buyer loan program that seems like a good fit, reach out directly to a lender for more information.
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