First time home buyers assistance programs in california

You might think that because you live in the Golden State, you’ll need to save tens of thousands for a down payment and have nearly perfect credit in order to qualify for a home loan.

Luckily, that’s not always the case. These California Housing Finance Agency (CalHFA) first-time home buyer programs are designed to help you buy a home, no matter your financial or credit situation.

1. CalHFA Conventional Loan Program

Who’s it for? Home buyers with less money for a down payment.

The CalHFA Conventional Loan Program is designed to help first-time home buyers in California get a conventional loan with a low down payment. A conventional loan is a traditional home loan offered through banks and credit unions.

The CalHFA Conventional Loan is a 30-year loan term, which means borrowers will make payments on their loans for a total of 30 years. Low-income borrowers may be eligible for lower-than-market interest rates if they use CalHFA to obtain a conventional mortgage.

CalHFA will help you find a qualified lender to process this type of loan.

Requirements include:

• A minimum credit score of 660: Eligible low-income borrowers can qualify for these loans with a score as low as 660. To be considered low income, you’ll need to have an income that is less than or equal to 80% of Fannie Mae’s Area Median Income for your area. If you make more than this, you’ll need a credit score of at least 680.
• 43% or lower debt-to-income ratio: This refers to how much money you pay in bills or debts divided by how much you make before taxes each month. Let’s say your debts amount to $2,000 per month and you make $6,000 monthly. Your DTI ratio would be $2,000/$6,000 = .33, or 33%.
• Income cannot exceed California’s income limits by county: Check your county’s limits to be sure your income doesn’t exceed them.
• First-time home buyer status: You likely won’t qualify if this is not your first mortgage.
• Completion of a home buyer education course: You can find recommended courses on the CalHFA website.

You may also need to meet specific mortgage lender requirements. Typically, CalHFA home loans have down payment options as low as 3% of the home’s value. Let’s say your home loan is $200,000, for example. You would only need a $6,000 down payment.

Mortgage rates for this program are usually below the market rate, but they’re typically higher than government-backed home loan program rates.

2. CalPLUS Conventional Loan Program

Who’s it for? Home buyers who need help coming up with funds for closing costs.

CalPLUS conventional loans come with all of the features of the CalHFA conventional program with the added benefit of being able to finance your closing costs with a zero-interest loan.

How does this work? CalPLUS loans are offered in conjunction with CalHFA’s Zero Interest Program (ZIP). Borrowers can pay for their closing costs using ZIP, which gives them a loan equal to either 2% or 3% of the mortgage amount.

This ZIP loan has an interest rate of 0%, and payments are deferred for the life of your mortgage loan. This means that you won’t have to pay back the home loan until you sell, refinance or pay off the mortgage.

For the benefit of having assistance with their closing costs, CalPLUS borrowers will pay slightly higher interest rates than other CalHFA loan borrowers.

Requirements include:

• You’ll need a minimum credit score of 660 for low-income borrowers or a minimum 680 for those who don’t meet low-income requirements.
• You must have a 43% or lower DTI ratio.
• Your income cannot exceed California’s income limits by county. Check your county’s limits to be sure your income doesn’t exceed them.
• You must be a first-time home buyer.
• You have to complete a home buyer education course. You can find recommended courses on the CalHFA website.

CalPLUS loans can also be used with CalHFA’s MyHome program for help with your down payment – keep scrolling to see our section on MyHome.

3. CalHFA FHA Loan Program

Who’s it for? Home buyers who want low mortgage rates.

The CalHFA FHA loan program is a first-time home buyer home loan that is backed by the U.S. Federal Housing Administration. FHA loans are safer for lenders compared to conventional loans because they’re backed by the federal government. As a result, these loans often have lower interest rates than conventional loans. These loans also allow borrowers to put down as little as 3.5%.

The CalHFA FHA loan is a 30-year fixed loan and is offered through most major lenders in California.

Requirements include:

• You’ll need a minimum credit score of 660.
• You must have a 43% or lower DTI ratio.
• Your income cannot exceed California’s income limits by county. Check your county’s limits to be sure your income doesn’t exceed them.
• You must be a first-time home buyer.
• You’ll have to complete a home buyer’s education course. You can find recommended courses on the CalHFA website.
• The FHA has its own requirements on income and property details that you’ll need to meet in order to be eligible.

4. CalPLUS FHA Loan Program

Who’s it for? FHA borrowers who need help coming up with funds for closing costs.

CalPLUS FHA loans include the same features of the CalHFA FHA loan, but with the added benefit of being able to utilize ZIP to help pay your closing costs – just like with CalPLUS conventional mortgages.

Remember that ZIP loans are offered as either 2% or 3% of your total loan amount, and come with interest rates of 0% deferred payments for the life of your mortgage loan.

However, you will take on a slightly higher mortgage interest rate with these loans.

ZIP can be layered with the MyHome program on these loans, so borrowers can get help with their down payments, too.

Requirements include:

• You’ll need a minimum credit score of 660.
• You must have a 43% or lower DTI ratio.
• Your income cannot exceed California’s income limits by county. Check your county’s limits to be sure your income doesn’t exceed them.
• You have to be a first-time home buyer.
• You’ll have to complete a home buyer’s education course. You can find recommended courses on the CalHFA website.
• The FHA has its own requirements on income and property details that you’ll need to meet in order to be eligible.

5. CalHFA VA Loan Program

Who’s it for? California veterans, current military personnel or eligible surviving spouses.

The CalHFA VA loan is targeted to help current or former military members receive financing on their home. This home loan is funded by the Department of Veterans Affairs and typically has lower than market mortgage rates, requires no down payment and is a 30-year fixed loan.

Requirements include:

• You must be a veteran or current active-duty military member, or an eligible surviving spouse. You can learn more about eligibility on the VA website.
• You need to have a minimum credit score of 660.
• You must have a 43% or less debt-to-income ratio.
• Your income cannot exceed California’s income limits by county. Check your county’s limits to be sure your income doesn’t exceed them.
• You must complete a home buyer’s education course. You can find recommended courses on the CalHFA website.
• Most VA loan borrowers have to pay a funding fee, which is a small percentage of the loan amount. However, you can use the MyHome program to help cover this cost and other closing costs.

CalHFA can help you find the best lender for a VA loan.

6. CalHFA USDA Loan Program

Who’s it for? Buyers purchasing a home in a rural area of California.

The CalHFA USDA loan program is ideal for any first-time home buyer who wants to purchase a home outside of major cities in California. This home loan is funded through the U.S. Department of Agriculture and has many perks, including 100% financing options (no down payment requirement). The CalHFA USDA loan is a 30-year fixed loan.

Requirements include:

• The property must be in a rural location. Check with CalFHA to determine whether a certain location you want to buy in qualifies.
• You need a minimum credit score of 660.
• You must have a 43% or less debt-to-income ratio.
• Your income cannot exceed the USDA income limits by county. USDA income limits differ from California’s, so it’s important to make sure you make less than the maximum for your area.
• You must complete a home buyer’s education course. You can find recommended courses on the CalHFA website.
• The USDA loan has its own requirements on income and property details that you’ll need to meet in order to be eligible.

7. CalHFA Down Payment Assistance Programs

Who’s it for? Home buyers who need help coming up with down payment funds.

The CalHFA down payment assistance programs help you pay for down payment costs at the time of closing. These loans can be combined with other CalHFA programs as long as you meet the income requirements. The main program that offers down payment assistance is the MyHome Assistance program, which includes special rules for school and fire department employees along with VA loan borrowers.

MyHome Assistance Program

This program comes in the form of a loan that provides up to the lesser of $10,000 or 3% of your home loan value at the time of closing for most loans, except FHA loans which allow up to 3.5%. This loan can be used to help with down payment or closing costs.

MyHome loans are deferred loans, so payment isn’t due until you pay off the loan or sell or refinance the property. However, unlike with ZIP, MyHome loans charge interest, which will be due in addition to the principal once your loan becomes due.

To qualify for this program, you’ll need to be a first-time home buyer and meet income requirements.

MyHome For School Employees, Fire Department Employees And VA Loan Borrowers

These special rules are for first-time home buyers in California who are:

• Teachers
• Employees in a K – 12 school
• Firefighters
• Fire Department Employees

This loan provides 3% of the home’s value in the form of a deferred, simple interest loan. There is no $10,000 cap.

VA loan borrowers, regardless of where they’re employed, are also exempt from the $10,000 cap.

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