California First-Time Buyer Assistance Programs
Buying a home is expensive – especially in California. The median sales price for a single-family home in the Golden State is $854,490, which is almost double the national average of $430,700. Luckily, California has programs that can help first-time buyers get an affordable mortgage and pay the upfront costs of buying a home.
Key Takeaways:
- California offers a wide range of programs that can provide first-time buyers the resources they need to afford a home.
- Some assistance programs combine first mortgages with grants and loans buyers can use to make a down payment and afford closing costs.
- To be eligible for these programs, borrowers may need to qualify as a first-time buyer and meet credit and income requirements.
What Is The California Housing Finance Agency?
The California Housing Finance Agency is the state’s primary source of buyer assistance programs. It offers conventional and government loans paired with one of its down payment assistance programs.
CalHFA’s first mortgages come in several varieties and are geared toward various borrowers. You can add down payment assistance if you meet the eligibility requirement.
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CalHFA Loan Programs For First-Time Buyers
Many California loan programs are available only to first-time buyers – but that definition is more expansive than you might think. You can qualify as a first-time buyer if you haven’t owned a residential property in the past three years, and you’ll be occupying the property as your primary residence. You also can qualify as a first-time buyer if you move into the home within 60 days of your closing date.
CalHFA doesn’t offer loans directly, so you’ll need to find and apply with an approved lender to get a loan. Loan options include:
- CalHFA Conventional Loans. A conventional mortgage designed to pair with a MyHome deferred-payment junior loan for the down payment and closing costs.
- CalPLUS Conventional Loans. A conventional first mortgage designed to be combined with the CalHFA Zero Interest Program to cover closing costs. The CalPLUS loan has a slightly higher interest rate than the CalHFA conventional loan.
- CalHFA FHA Loans. A first mortgage insured by the Federal Housing Administration that’s paired with a MyHome deferred-payment junior loan. Because these loans are backed by the government, buyers can qualify with a lower credit score.
- CalPLUS FHA Loans. An FHA loan that’s combined with a CalHFA Zero Interest Program loan to cover closing costs. CalPLUS FHA loans have a slightly higher interest rate than CalHFA FHA loans.
- CalHFA VA Loans. A loan backed by Veterans Affairs and offered to eligible military service members, veterans and their surviving spouses. Eligible first-time buyers can pair this VA loan with a MyHome deferred-payment junior loan to cover closing costs.
- CalHFA USDA Loan. A loan backed by the U.S. Department of Agriculture and offered to low- and moderate-income borrowers buying homes in eligible rural areas. This USDA loan can be combined with the MyHome assistance program to cover closing costs.
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MyHome Down Payment Assistance Program
The CalHFA MyHome down payment assistance program provides deferred-payment junior loans borrowers can use to make a down payment and pay closing costs. This junior loan can be for as much as 3% of the purchase price of a conventional loan and up to 3.5% of the purchase price of a government loan. You’ll need to be a first-time home buyer and meet income limits and property requirements to be eligible.
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Zero Interest Program
The CalHFA Zero Interest Program offers a no-interest junior loan to cover closing costs. You won’t have to make monthly payments on a ZIP loan, but that doesn’t mean it’s forgivable, as it will still need to be repaid. While a ZIP loan can help you cover your closing costs, it also will result in a higher interest rate on your first mortgage.
CalHFA Forgivable Equity Builder Loan
The CalHFA Forgivable Equity Builder Loan is a loan that is forgivable if you live in the home as your primary residence for at least five years after closing. This loan can be for as much as 10% of the home’s purchase price. Note that you must be a first-time home buyer, and this loan can only be used with a CalHFA first mortgage.
California Dream For All Shared Appreciation Loan
The California Dream For All shared appreciation loan program offers up to 20% for a down payment or closing costs up to $150,000. All borrowers must be first-time home buyers, and at least one borrower must be a first-generation home buyer. In addition, you must meet income limits for the county where you’re buying.
It’s offered to first-time, first-generation home buyers and is paired with a Dream For All conventional first mortgage. When the buyer sells the home, they must repay the principal on the loan plus a share of the home’s appreciated value – either 20% or 15%, depending on income.
For example, an eligible borrower buys a $500,000 home using a $400,000 first mortgage and a $100,000 Dream For All loan. If they sell the home in five years for $640,000, they will have to repay from the proceeds the balance on the primary mortgage and the Dream For All Loan in the amount of $128,000. That includes the original $100,000 principal plus $28,000, which is 20% of the $140,000 in the home’s appreciated value.
To get a Dream For All shared appreciation loan, you must apply and be approved for a Dream For All loan voucher. That requires you to get preapproved for an eligible loan, take a one-hour home buyer education course, and provide documents showing you meet income limits.
A limited number of vouchers are available and distributed through a random drawing. Check with CalHFA for updates on when it will open the next voucher application process.
How To Apply For California First-Time Home Buyer Loan Programs
If you think one of California’s first-time home buyer assistance programs might be right for you, here’s how to apply.
Eligibility Requirements
To be eligible for a CalHFA loan, you must:
- Be a first-time home buyer for most loans.
- Meet your primary loan’s requirements, including minimum credit score, maximum debt-to-income ratio, loan-to-value ratio and combined loan-to-value ratio.
- Meet income limits based on your county.
- Complete a home buyer education course.
In addition, the property must:
- Be your primary residence.
- Be a single-family, one-unit residence. This includes condominiums and manufactured homes.
| Loan Type | Minimum Credit Score | Maximum DTI Ratio | Maximum LTV Ratio | Maximum CLTV Ratio |
|---|---|---|---|---|
| CalHFA Conventional | 680 | 45% | 97% | 105% |
| 700 | 50% | 97% | 105% | |
| CalPLUS Conventional | 680 | 45% | 97% | 105% |
| 700 | 50% | 97% | 105% | |
| CalHFA FHA | 640 | 45% | 96.5% | 105% |
| 700 | 50% | 96.5% | 105% | |
| 660, with manual underwriting. | 43%, with manual underwriting. | 96.5% | 105% | |
| CalPLUS FHA | 640 | 45% | 96.5% | 105% |
| 700 | 50% | 96.5% | 105% | |
| 660, with manual underwriting. | 43%, with manual underwriting. | 96.5% | 105% | |
| CalHFA VA | 640 | 45% | 100% | 105% |
| 660 | 50% | 100% | 105% | |
| CalHFA USDA | 640 | 45% | 100% | 105% |
| 660 | 50% | 100% | 105% |
Home Buyer Education Requirement
Another requirement for getting a CalHFA loan is to complete a home buyer education course. This course can either be taken online or in person.
- Online: EHome’s eight-hour home buyer education and counseling course is the only online course that CalHFA accepts because it offers an hourlong, one-on-one follow-up counseling session.
- In person or virtual: Live home buyer education and counseling through NeighborWorks America or any HUD-approved housing counseling agency.
Finding A Lender
To get started, you can contact a loan officer to guide you through the process. Here are some resources to help you find a loan officer:
- CalHFA’s Top Lending Heroes have helped the most home buyers obtain CalHFA first mortgage loans.
- CalHFA preferred loan officers are loan officers who have been trained and have experience with CalHFA loans.
- CalHFA’s complete lender database will help you find a branch office in your area. Just keep in mind that not all of them will have officers who are experienced with CalHFA loans.
- Building Black Wealth participating lenders who are part of an initiative to increase Black homeownership in California.
- You can also call CalHFA at (877) 922-5432.
Required Documents
Before contacting a loan officer, be sure to prepare the following documents:
- Pay stubs
- Bank statements
- Employment history
- Income tax returns
Local And Other California Down Payment Assistance Programs
Most cities, towns and counties have local assistance programs. Here’s a look at some local down payment assistance programs in California. You can use Freddie Mac’s DPAOne search tool to find programs in your area.
| Program | Description |
|---|---|
| Golden State Finance Authority Platinum Program | Offers down payment and closing cost assistance through a 15-year second loan for up to 5.5% of the first mortgage loan amount. This loan requires monthly payments and has the same interest rate as the primary mortgage. This program offers flexible income limits and is not limited to first-time home buyers. |
| Golden State Finance Authority Platinum Select Program | Offers down payment and closing cost assistance for up to 5% of the first mortgage loan amount. Of that, 3.5% is a 15-year second loan that requires monthly payments and has the same interest rate as the primary mortgage. The remaining 1.5% may be made available as a grant that doesn’t need to be repaid. This program is only open to people in qualifying occupations, such as law enforcement, public education, first responders and medical and health care workers. |
| Golden State Finance Authority Assist-To-Own Program | Offers up to 3.5% down payment assistance as a deferred-payment, zero-interest second loan. It also provides 2% as a grant that does not have to be repaid. Only available to county employees working for a GSFA member county. |
| Golden State Finance Authority Golden Opportunities Program | Offers low- to moderate-income home buyers down payment assistance up to 5% of the first mortgage loan amount, with 3.5% offered as a 15-year second mortgage with monthly payments and 1.5% as a grant. This program works only with government-backed loans. |
| Los Angeles Low Income Purchase Assistance Program | First-time home buyers with an annual household income of less than 80% of the area median income can receive up to $161,000 for purchase assistance, including a down payment and closing costs, as a deferred-payment shared-appreciation loan. Your credit score will need to be at least 660, and you’ll need to contribute at least 1% of the home price as a down payment. |
| Los Angeles Moderate Income Purchase Assistance Program | Offers a deferred loan of up to $115,000 to cover your down payment or closing costs as a deferred-payment shared-appreciation second loan. To be eligible, you must meet income limits and contribute at least 1% of the purchase price as your down payment. However, this program is temporarily out of funding. |
| Oakland CalHome Program | Offers a deferred loan of up to $200,000 on a 30-year second mortgage with 3% interest. To be eligible, you must be a first-time home buyer and contribute at least 3% of the purchase price to your down payment or closing costs. |
| Pomona First-Time Homebuyer Mortgage Assistance Program | Offers down payment assistance as a deferred shared appreciation loan of up to $100,000 with a 15-year term. However, you must be a first-time home buyer and meet income limits. |
| Sacramento Permanent Local Housing Allocation | Offers first-time home buyers a deferred payment loan of up to 20% of the purchase price to a maximum of $50,000. |
| City of San Diego First-Time Homebuyer Closing Cost Assistance Grant | Offers first-time home buyers up to $10,000 in closing cost assistance. |
| City of San Diego Down Payment Assistance Loan | Offers a down payment assistance loan of up to 25% of the purchase price at 3% simple interest. |
| San Francisco Down Payment Assistance Loan Program | Offers low- to moderate-income home buyers up to $500,000 in down payment assistance as a deferred, second loan. |
The Bottom Line
It can take a long time to save enough money to make a down payment and pay your closing costs – especially if you’re buying a home in California. CalHFA loan programs are designed to help make homeownership more affordable for first-time home buyers. If you’re ready to buy a home but haven’t been able to save enough money or get approved for a loan, one of these first-time home buyer programs might help you finally become a homeowner.
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