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Buying a home for the first time might present serious sticker shock, especially in high-cost California. The California Housing Finance Agency, or CalHFA, oversees several homebuyer assistance programs that might help. In California, you’re considered a first-timer if you haven’t owned and occupied a home in the past three years, and you could qualify for a CalHA program with an income as high as $300,000 in some corners of the state. Here’s an overview.

California first-time homebuyer loan programs

CalHFA offers first-time homebuyers access to fixed-rate conventional and government-backed loan programs, with the option to roll in down payment and closing cost assistance. The requirements to be eligible include:

  • A minimum credit score of 660 and up to 680, depending on loan type
  • Meeting CalHFA’s income limits based on your specific area
  • Buying a home for no more than $1,149,825
  • Attending the eHome homebuyer counseling course approved by CalHFA and presenting a certificate of completion

CalHFA and CalPLUS conventional and FHA loans

CalHFA offers two types of 30-year, fixed-rate conventional and FHA loans: CalHFA Conventional or FHA; and CalPLUS Conventional or FHA with down payment and/or closing cost assistance (more on that below). The CalPLUS options come with a slightly higher interest rate.

Whether you apply for a conventional or FHA loan, you’ll need to meet the respective requirements, as well as any lender requirements above and beyond CalHFA’s guidelines.

CalHFA VA loan

The CalHFA VA program provides 30-year, fixed-rate VA loans to eligible military. You’ll need to meet the typical requirements for a VA loan, including having a certificate of eligibility, to qualify.

CalHFA USDA loan

CalHFA also offers 30-year, fixed-rate USDA loans for those buying in designated rural areas. Along with the geographic requirement, you’ll need to meet the income limits and other guidelines for USDA loans.

CalHFA Forgivable Equity Builder Loan

The Forgivable Equity Builder Loan program gives first-time homebuyers a loan of up to 10 percent of the purchase price of the home. The loan is forgivable if the borrower continuously occupies the home as their primary residence for five years. This loan can only be used with a CalHFA first mortgage.

California down payment assistance

For many first-time homebuyers, saving up for a down payment and closing costs is one of the most daunting challenges to homeownership. CalHFA offers several assistance programs to help you bridge this gap. These programs are second mortgages, considered “subordinate” or “junior” loans, meaning you won’t repay the funds until you sell your home or move or refinance the first mortgage. That can help make your monthly mortgage payments more affordable.

MyHome Assistance and Zero Interest Program

CalHFA’s MyHome Assistance program and Zero Interest Program (ZIP) are deferred second mortgages designed to help with down payment and closing costs. These loans provide up to 3 percent for a conventional loan (or 3.5 percent for an FHA loan) of the home’s purchase price or appraised value, whichever is lower. In many cases, you can combine this assistance with CalHFA’s loan programs.

California Dream For All Shared Appreciation Loan

CalHFA’s Dream For All is a newer assistance program that provides first-generation, first-time buyers in California with 20 percent of the home’s purchase price in a shared appreciation loan. You’ll use the 20 percent to cover the down payment at the time of purchase. When you sell the home or move or refinance your mortgage, you’ll repay that 20 percent, plus:

  • Up to 20 percent of the home’s appreciation if your income is above 80 percent of the area median income (AMI)
  • Up to 15 percent of the home’s appreciation if your income is below or equal to 80 percent of the AMI

There is a limit on how much you’ll have to repay in shared appreciation,  however: The amount can’t exceed 2.5 times your original mortgage.

Other first-time homebuyer loan programs

While you’re considering first-time buyer programs in California, also check out these popular nationally available loans, which can be obtained with many different types of mortgage lenders, both partners and non-partners of CalHFA:

  • FHA loans – If you have a less-than-stellar credit score or limited savings, consider an FHA loan. These loans are widely available, have a minimum credit score of 580 and require a down payment as little as 3.5 percent.
  • VA loans – If you’re a member of the military or veteran, you could qualify for a VA loan, which requires no down payment.
  • USDA loans – USDA loans don’t have a down payment requirement, but are only available to borrowers buying in a USDA-eligible rural area. You typically need a credit score of 640 or higher to qualify.
  • Good Neighbor Next Door program – This HUD program has a very low down payment requirement on homes in certain areas, coupled with the ability to save 50 percent on the purchase price.

Get started

As you prepare to become a first-time homebuyer, here are some next steps:

  • Do your homework. CalHFA itself doesn’t issue loans or make application decisions. However, it has vetted a list of approved lenders you can reach out to.
  • Work on your credit score. It’s the most important factor in determining your mortgage rate, so focus on boosting your number.
  • Compare lenders. Whether or not you get a mortgage through one of the CalHFA programs, it’s still important to shop around to find the most competitive rates. Doing so can save you tens of thousands in interest through the life of your loan.

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