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Buying a home for the first time can leave you with serious sticker shock. That’s especially in true in California — which has some of the highest property prices in the country. Those looking to crack the homeownership barrier in the Golden State can take advantage of several programs to help with down payment and closing costs.

The California Housing Finance Agency, or CalHFA, offers a comprehensive selection of homebuyer assistance programs, mostly geared toward first-time homebuyers with low or moderate incomes. In California, you’re considered a first-time homebuyer if you haven’t owned and occupied a home in three years.

Here’s an overview of CalHFA programs that can help you purchase your first home.

CalHFA first-time homebuyer loan programs

CalHFA offers conventional and government-insured loan programs to help first-time buyers with fixed-rate loans and the option to roll in down payment and closing cost assistance into your mortgage.

Borrower requirements

  • Must have a minimum credit score of 640
  • Debt-to-income ratio can’t exceed 45 percent
  • Must meet CalHFA’s income limits based on your specific area
  • In most instances, must be a first-time homebuyer and a U.S. citizen, permanent resident or qualified alien
  • Must attend a homebuying counseling course and present a certificate of completion
  • Must meet any additional loan requirements of your CalHFA-approved lender and the mortgage insurer

Note: An approved homebuyer counseling course can be taken online through eHome for $99, or in-person through a HUD-approved housing counseling agency or NeighborWorks America; fees vary by agency.

Property requirements

  • Sales price can’t exceed $705,000
  • Property must be located within California and used as a primary residence until it’s refinanced or sold
  • Must be a single-family, one-unit home
  • Some condos, accessory dwelling units (guest houses and in-law quarters, for example), and manufactured homes are permitted
  • Land trusts and leaseholds aren’t eligible
  • Maximum lot size of 5 acres

CalHFA and CalPLUS Conventional Loan Programs

The CalHFA Conventional program is a first mortgage loan insured through private mortgage insurance on the conventional market. The interest rate on the CalHFA Conventional loan is fixed throughout the 30-year term.

Meanwhile, the CalPLUS Conventional program comes with a slightly higher 30-year fixed interest rate, but you can combine it with the MyHome Assistance program for down payment help and the CalHFA Zero Interest Program (ZIP) for closing costs. ZIP, as its name implies, doesn’t charge borrowers interest on the money it lends through the program — 3 percent or 4 percent of the purchase price. If you choose the higher assistance amount, you’ll receive a higher interest rate on the loan itself.

CalHFA and CalPLUS FHA loan programs

The CalHFA FHA Program is a loan insured by the Federal Housing Administration that comes with a CalHFA 30-year fixed interest rate for a primary home. The FHA has specific borrowing and property requirements that must be met.

Another option: the CalPLUS FHA program. It’s an FHA-insured loan that comes with a slightly higher 30-year fixed rate but it’s paired with the CalHFA ZIP. Like the CalPLUS conventional program, ZIP provides 3 percent or 4 percent of the CalPLUS FHA loan amount to assist with closing costs or prepaid items only (including FHA’s mandatory upfront mortgage insurance premium).

Cal-EEM + Grant Program

The Cal-EEM + Grant program allows first-time or repeat buyers to combine an FHA-insured Energy Efficient Mortgage with a Cal-EEM Grant for certain energy-efficient home improvements. The interest rate on the Cal-EEM is fixed for 30 years.

Plus, you can combine the mortgage with a grant of up to 4 percent of the purchase price. This must be used to pay for energy-efficient improvements that exceed FHA’s limits for improvement costs. The maximum limit is either 5 percent of the property’s value (not to exceed $8,000) or $4,000, whichever is greater based on the value of the property. Borrowers must get an energy assessment from a qualified energy assessor to identify cost-effective energy improvements.

CalHFA VA Loan Program

The CalHFA VA program is a loan insured by the U.S. Department of Veterans Affairs. It features a CalHFA fixed interest rate for a 30-year term. The VA has its own requirements for eligibility.

CalHFA down payment assistance programs

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 down payment and closing cost assistance programs to help you bridge this gap. These are considered “subordinate” or “junior” loans, meaning payments are deferred until your home is sold, refinanced or paid in full — and that can help make monthly mortgage payments more affordable.

MyHome Assistance Program

The MyHome Assistance Program is a deferred-payment junior loan that provides up to 3.5 percent of the purchase price or appraised value (whichever is lower) to help pay for down payment or closing costs. In many cases, you can combine MyHome Assistance with CalHFA’s loan programs.

School Teacher and Employee Assistance Program

The School Teacher and Employee Assistance Program is designed for first-time buyers who are teachers, administrators, school district employees and staff members who work at California’s K-12 public schools. These loans provide up to 4 percent of the purchase price toward down payment and closing costs, and can only be used with an eligible CalHFA first mortgage loan. This loan can be used only for down payment assistance and/or closing costs.

Get started

You have the lowdown on California’s assistance programs for first-time buyers, and you’re ready to get the ball rolling. CalHFA doesn’t issue loans or make application decisions. However, it has vetted a list of approved lenders you can reach out to. Generally, lenders have their own borrowing requirements, and interest rates vary. Shop around with a few different companies to ensure you’re getting the best deal.

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