The California Housing Finance Agency, or CalHFA, offers several loan programs to help qualified first-time home buyers get a mortgage.
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.
National first-time home buyer programs to consider
Conventional mortgages, with standards enforced by government-sponsored entities Fannie Mae and Freddie Mac, can be particularly helpful to first-time home buyers. Borrowers may qualify with a down payment as low as 3%.
FHA-backed loans are designed for home buyers who may not meet the financial requirements of a conventional loan. FHA loans can be obtained with a down payment as low as 3.5% and weaker credit scores.
VA loans were created to help military personnel and their families become homeowners. Backed by the U.S. Department of Veterans Affairs, many VA loans offer a 0% down payment, relaxed credit requirements and lower interest rates.
USDA loans are ideal for first-time buyers interested in rural living. Available to anyone (not just farmers or ranchers), USDA loans can be obtained by low-income applicants at low interest rates with no down payment.
CalHFA highlights and eligibility requirements
- 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
- 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
California first-time home buyer loan programs
CalHFA Conventional and CalPLUS Conventional Loan Programs
Both of these conventional loans are Fannie Mae HFA Preferred and have 30-year terms with fixed interest rates, though rates depend on your financial circumstances, lender fees and other factors.
The CalHFA Conventional Loan may be combined with either the MyHome Assistance Program or the School Teacher and Employee Assistance Program (formerly known as the Extra Credit Teacher Home Purchase Program) to cover a down payment or closing costs.
CalPLUS Conventional loans can be combined with the CalHFA Zero Interest Program to reduce down payment or closing costs.
CalHFA FHA and CalPLUS FHA Loan Programs
CalHFA FHA and CalPLUS FHA loans are government-insured mortgages for first-time home buyers. They generally work the same as traditional FHA loans except they can be combined with certain California-only down payment and closing cost assistance programs. Both CalHFA FHA loan programs allow manufactured homes as long as they’re on a permanent foundation.
The CalHFA FHA loan can be combined with either the MyHome Assistance Program or School Teacher and Employee Assistance Program for down payment assistance.
The CalPLUS FHA loan can be combined with the CalHFA Zero Interest Program for prepaid or closing costs.
» MORE: FHA loan requirements
Cal-EEM + Grant Program
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 combined with a grant of up to 4% of the total loan amount.
The Cal-EEM + Grant program can also be combined with either the MyHome Assistance Program or School Teacher and Employee Assistance Program to help cover down payment or closing costs.
CalHFA VA Loan Program
The CalHFA VA loan program is a 30-year fixed-rate mortgage designed for borrowers — first-time and repeat home buyers — who meet requirements set by the U.S. Department of Veterans Affairs and have the certificate to prove it. This loan generally works like a traditional VA loan, except it’s combined with either the MyHome Assistance program or School Teacher and Employee Assistance Program to help cover down payment or closing costs.
California down payment assistance programs
MyHome Assistance Program
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. MyHome Assistance Program loans are limited to 3.5% of the home’s purchase price or appraised value, whichever is lower.
Qualified borrowers are generally allowed to combine the MyHome Assistance Program with other down payment assistance or grant programs.
School Teacher and Employee Assistance Program (School Program)
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 employees and staff members of California K-12 public schools. Employees of charter schools and county/continuation schools are also eligible.
School Teacher and Employee Assistance Program loans are limited to 4% of the sales price or appraised value, whichever is less.
Qualified borrowers are generally allowed to combine the School Teacher and Employee Assistance program with other FHA-approved or Fannie Mae Community Seconds subordinate loans, but not the MyHome program.
CalHFA Zero Interest Program (ZIP)
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 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.
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.
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