California Down Payment Assistance Programs

Buying a home especially in California IS a big deal. For many it is the single largest financial transaction they may ever make. Detailed below are some of the first time homeowner and downpayment assistance programs available in California. California Housing Finance Agency (CalHFA) offers several downpayment assistance programs as well as other available national loan programs

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

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.

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 for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.

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 VA-approved lenders require scores of at least 640.

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 scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.

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

Cal-EEM + Grant Program

State program

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 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.

MyHome Assistance Program

State 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. 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

State program

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 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

State 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 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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