CalHFA Loans
Getting Started
CalHFA, also known as the California Housing Finance Agency, offers several first-time home buyer loan programs. The CalHFA FHA loan program features a government-backed loan insured by the Federal Housing Administration (FHA) with a 30-year fixed interest rate.
What are CalHFA Loans?
Due to their backing, FHA loans typically have lower credit score and down payment requirements than conventional loans. To qualify, you’ll need a down payment of at least 3.5% of the purchase price and a credit score of 580, on average. One of the occupying first-time borrowers must also complete a home buying education and counseling course.
Types of CalHFA Loans
CalPLUS FHA Loans
The CalPLUS FHA loan program is similar to the option we just discussed with a few small differences. This FHA-insured mortgage also comes with a 30-year fixed interest rate, though the rate will be slightly higher than what you might find with the previous option.
This is because the CalPLUS FHA loan has the added advantage of the CalHFA Zero Interest Program (ZIP) – a deferred second mortgage with zero interest that helps cover closing costs. And at least one borrower will need to finish a home buying education course to qualify.
CalHFA VA Loans
The CALHFA VA loan program offers a 30-year first mortgage with a fixed interest rate, backed by the Department of Veterans Affairs. These loans are specifically available to active service members, veterans and surviving spouses.
VA loans come with a few unique advantages, including no minimum down payment requirement and less stringent loan qualification requirements. Typically, borrowers need a credit score of 580 to qualify.
CalHFA USDA Loans
Guaranteed by the U.S. Department of Agriculture, the CalHFA USDA loan program is similar to the other programs offered by CalHFA, targeted at prospective home buyers in rural areas. USDA loans are designed to help low-income borrowers buy rural property, so there are location restrictions in place.
The CalHFA USDA loan program is a first mortgage loan program that can be combined with other offers, such as the MyHome Assistance Program, for down payment and closing cost assistance. To qualify, borrowers must have a credit score of at least 640 and meet income limit and location requirements.
Conventional Loan Programs
Alongside government-backed loans, you can also consider conventional loans. These loans are not insured by a government agency. Therefore, they often have stricter qualification requirements. Still, these loans can be a great option when combined with other down payment and closing costs assistance programs.
CalHFA Conventional Loans
The CalHFA conventional loan is a 30-year, fixed-rate first mortgage offered by the California Housing Finance Agency. To qualify, conventional loans typically require a credit score of at least 620 and a debt-to-income (DTI) ratio of 50% or less. The minimum down payment requirement is 3%. You’ll also need to finish a home buying education course to be eligible.
CalPlus Conventional Loans
CalPLUS conventional loans use the same 30-year, fixed-rate first mortgage offered by CalHFA. They then combine it with the CalHFA Zero Interest Program to help with closing costs. In exchange for the closing cost assistance, this loan has a slightly higher interest rate. That makes this choice higher than the CalHFA conventional loan interest rate.
Qualification requirements for this program are the same as other conventional loans, though borrowers should be aware that income limits also apply.
First-Time Home Buyer Programs In California
Now that we’ve covered first-time home buyer loans, it’s time to get to the fun part: down payment and closing cost assistance. Your down payment and closing costs make up the bulk of the upfront costs associated with home buying, so if you can lessen these costs, you’re that much closer to reaching your dream of homeownership.
Let’s jump into some of the first-time home buyer programs that you should consider before buying a house in California.
MyHome Assistance Program
This down payment assistance program is a junior loan with deferred payments in amounts up to 3.5% of the home’s purchase price or appraised value, which can be used toward down payment and closing costs.
The MyHome Assistance Program can be combined with either CalHFA conventional loans or government-backed loans, though with a conventional loan, you’ll only be able to receive up to 3% of the purchase price in down payment assistance, opposed to 3.5% with an FHA loan.
CalHFA Zero Interest Program
The CalHFA Zero Interest Program is a deferred second mortgage with zero interest that helps cover closing costs. It is only available when combined with CALHFA first mortgage programs, like the CalPLUS conventional and CalPLUS FHA loan options. ZIP assistance is available for up to 4% of the loan amount.
First-Time Home Buyer Grants In California
Unlike down payment assistance, which is often offered in the form of a deferred or interest-free loan, grants are offered with no obligation to repay. So depending on your specific housing situation, these grants may be one of the most impactful tools you can utilize as a first-time home buyer.
Carol The Closer is proud to offer our amazing Californian first-time home buyer clients CalHFA Loans. Schedule a free consultation today with Carol Escobar for more information on CalHFA loans or any of the great mortgages she offers!