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California First-Time Home Buyer Programs of 2018

July 30, 2018
Finding the Right Mortgage, Mortgages
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The home buying 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. Keep reading to 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

National program

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,

 

FHA loans

National program

Best for

Low credit score

Low down payment

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

 

VA loans

National program

Best for

Military

Low down payment

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

 

USDA loans

National program

Best for

Low down payment

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

 

CalHFA first-time home buyer loan programs

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.

CalHFA highlights and eligibility requirements

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 640, in most cases
  • 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:  Tips for first-time home buyers

Cal-EEM + Grant Program

State program

Learn more

at CalHFA

Best for

Energy-efficient improvements

What you need to know

The Cal-EEM + Grant program is an FHA-insured Energy Efficient Mortgage for both first-time and repeat home buyers that has a 30-year term with a fixed interest rate. To help borrowers make energy-efficient improvements that are more than the maximum amount allowed by the FHA, this mortgage is

 

MyHome Assistance Program

State program

Learn more

at CalHFA

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.

 

School Teacher and Employee Assistance Program

State program

Learn more

at CalHFA

Best for

Teachers

Public school employees

Down payment assistance

Closing cost assistance

What you need to know

Like the MyHome Assistance Program, the School Teacher and Employee Assistance Program is a deferred-payment subordinate loan that helps pay for a down payment or closing costs . The difference, as its name implies, is this program is reserved for teachers, school administrators, school district

 

CalHFA Zero Interest Program

State program

Learn more

at CalHFA

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 4% of the total loan amount in the form of a no-interest second loan. Payments on a CalHFA Zero Interest Program loan are

 

Your next step

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.

» MORE: See the best California mortgage lenders

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