California 2019 First-Time Home Buyer Programs
The homebuying process can be daunting, not to mention expensive. That’s why the California Housing Finance Agency, or CalHFA, offers several loan programs to help qualified first-time home buyers get a mortgage.
You may also benefit from a national loan program that features low credit score or down payment requirements. Explore all the options for buying your first home in the Golden State.
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
- Low down payments
- 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.
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.
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.
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 highlights and eligibility requirements
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.
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
CalHFA first-time home buyer loan programs
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.
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.
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.
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.
Summary: 2019 CalHFA first-time home buyer programs
- MyHome Assistance Program for assistance with down payment and closing costs.
- CalHFA Zero Interest Program for closing cost help on CalPLUS Conventional and CalPLUS FHA loans.
- School Teacher and Employee Assistance Program for educators, administrators and school and district staff.
- CalEEM + Grant Program for an FHA-insured energy efficient mortgage.
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, Please call me, I will be happy to help on getting pre-qualified for a home, Call or Text (760)391-1741 or send an email: nadia@usdesertrealty.com
CalHFA doesn’t review applications or lend money; mortgage decisions are made by its network of preferred loan officers and approved lenders.
