First Time Homebuyer Programs California

Are you looking for First Time Homebuyer Programs California? If Yes, You are at the right place.

In this article, we are sharing all the information about First Time Homebuyer Programs California.

The cost of buying your first home can be extremely shocking. The homeownership barrier is especially high in California, where property values are among the highest in the nation. Several programs are available to assist with the down payment and closing costs for those looking to become homeowners in The Golden State.

California offers several mortgage programs that can lower your down payment requirements or mortgage costs. A mortgage lender may also offer specialty programs, which you can check when shopping. Here’s a list of the top programs available to first-time homebuyers in the state.

A wide range of homebuyer assistance programs are available through the California Housing Finance Agency, mainly for first-time homebuyers. A first-time homebuyer in California has never owned and occupied a home before. The CalHFA offers several programs that can assist you in buying your first home.

What are First Time Homebuyer Programs?

First Time Homebuyer program are for First-time homebuyers who can qualify for programs that help them achieve their dream of homeownership. First-time homebuyers can also qualify if they have not owned property in the last three years or previously owned a home.

There are several programs available to first-time homebuyers from mortgage companies, local governments, and community organizations, including mortgages with low down payments, tax incentives, closing cost assistance, and down payment assistance.

Types of First Time Homebuyer Programs California

The California Housing Finance Agency (CalHFA) provides several affordable first-mortgage loan programs for first-time homebuyers. You can finance your down payment or closing costs through these programs and borrow up to 105% of the home’s value.

CalHFA purchases mortgages from lenders approved by the agency to make home loans more accessible to first-time homebuyers. Founded in 1975, it is self-funded and receives no government funding.

However, it is important to note that the income limits for CalHFA loans are significantly higher. Those in higher-cost counties like San Francisco, Santa Clara and San Mateo ranged from $300,000 to $159,000 as of mid-2022.

Even so, you won’t qualify for a mortgage if you can’t afford the mortgage payment. An example of a CalHFA conventional loan with down payment financing and 7% interest would be $4,517 monthly for a $700,000 loan. The total monthly cost is $5,521, including property taxes, hazard insurance, and mortgage insurance.

CalHFA offers six loan programs. The programs restrict your choice of home to a single-family, one-unit property and require you to live there full-time.

First Time Homebuyer Programs California

You might need a down payment of tens of thousands of dollars and a nearly perfect credit score to buy a home in California.

Fortunately, that is only sometimes the case. Several first-time homebuyer programs are available through the California Housing Finance Agency (CalHFA), regardless of credit or financial situation. It is also important to remember that a first-time home buyer has yet to own a home in the past three years. Here are the different options.

Here are the First Time Homebuyer Programs California –

CalHFA Conventional Loan Program

CalHFA’s Conventional Loan Program helps first-time homebuyers qualify for conventional loans with low down payments. A conventional home loan is one from a bank or credit union that is also conforming.

There is a 30-year term on the CalHFA Conventional Loan, meaning the borrower will repay the loan for 30 years. CalHFA may offer lower-than-market rates to low-income borrowers seeking conventional loans. The CalHFA can help you find a lender who can process this type of loan.

Requirements for CalHFA Conventional Loan Program

Requirements	Description
Credit Score	The CalHFA Conventional Loan Program is available to low-income borrowers with a score as low as 660. In order to qualify for a low-income program, your income must be less than or equal to 80% of the median income for your area as determined by Fannie Mae. If you make more than this, a credit score of at least 680 is required.
DTI	If you have a credit score between 680 and 699, your DTI should be 45% or lower. Your DTI cannot exceed 50% if your score is 700 or higher. The DTI is calculated by dividing your debt payments by income before taxes and other deductions. Assume you make $6,000 monthly, and your debts are $2,000 monthly.
Income Limits	The income limit for each county in California cannot be exceeded. Make sure your income does not exceed the income limits for your county.
Home Buyer Status	First-time buyers are unlikely to qualify.
Home Buyer Education	The first-time buyer education course is required to apply for this loan program. On the CalHFA website, you can find recommended courses.

There may also be requirements specific to the mortgage lender. The down payment for CalHFA home loans is typically 3% of the home’s value. You would need a down payment of $6,000 for a home loan of $200,000.

The interest rates on these loans are usually lower than the market rate but higher than the interest rates on government-backed loans.

CalPLUS Conventional Loan Program

CalPLUS Conventional Loans are designed for home buyers who need help securing the funds to cover closing costs. CalPLUS conventional loans are similar to CalHFA conventional loans, but they offer a zero-interest loan option for closing costs. A CalPLUS loan can be combined with a Zero Interest Program (ZIP) provided by CalHFA. ZIP offers borrowers a loan equal to 2% or 3% of the value of their mortgages in order to pay their closing costs.

There is no interest rate on this ZIP loan, and your mortgage loan payments are deferred for the duration of the loan. The home loan will be repaid once you sell the house, refinance the mortgage or pay it off. The CalPLUS program offers borrowers the benefit of closing costs assistance at a slightly higher interest rate than CalHFA loans.

Requirements for CalPLUS Conventional Loan Program

Requirements	Description
Credit Score	For low-income borrowers, you’ll need a credit score of 660, and for those not qualifying for low-income loans, you’ll need a credit score of 680.
DTI	Your maximum debt-to-income ratio should be no more than 45% – 50%, depending on your credit score.
Income Limits	You cannot earn more than the income limits set by your county in California. Make sure your income doesn’t exceed your county’s limits.
Home Buyer Status	This program is only available to first-time buyers.
Home Buyer Education	The home buyer education course must be completed. On the CalHFA website, you can find recommended courses.

You can also use CalPLUS loans with CalHFA’s MyHome program to help with your down payment.

CalHFA FHA Loan Program

CALHFA offers a FHA Loan Program that helps home buyers find lower interest rates, and it’s backed by the Federal Housing Administration (FHA). The federal government insures FHA loans, making them safer for lenders than conventional loans. The interest rates on these loans are often lower than on conventional loans. The FHA also allows qualified borrowers to put down as little as 3.5% on a home loan.

CalHFA FHA loans are offered by many major lenders in California and have a 30-year fixed term.

Requirements for CalHFA FHA Loan Program

Requirements	Description
Credit Score	The minimum credit score required to qualify will typically be 640 – 700. The minimum credit score you need may vary depending on your DTI, property type, and other factors.
Debt-to-Income Ratio (DTI)	If your DTI is 43% or lower, manual underwriting is allowed. Your maximum DTI shouldn’t exceed 45% – 50% if you have a good credit score.
Income Limits	You cannot earn more than the income limits set by your county in California. Make sure your income doesn’t exceed your county’s limits.
Home Buyer Status	This requirement usually applies to first-time homebuyers.
Home Buyer Education	You’re usually required to take a home buyer’s education course. On the CalHFA website, you can find recommended courses.
Additional requirements	FHA loans require that you meet certain income and property requirements.

CalPLUS FHA Loan Program

A CalPLUS FHA Loan Program helps FHA borrowers come up with the funds they need to close on their mortgage. A CalPLUS FHA loan includes the same features as the CalHFA FHA loan, but you can use ZIP to cover your closing costs – just like a CalPLUS conventional loan.

The ZIP Loan comes with a 0% deferred payment interest rate for the life of the loan, and it is available at 2% or 3% of your loan amount. You will, however, have to pay a slightly higher interest rate on these loans.

CalPLUS FHA loans can be layered with ZIP to help borrowers repay their home loans.

Requirements for CalPLUS FHA Loan Program

Requirements	Description
Credit Score	Most lenders require a credit score of 640.
Debt-to-Income Ratio (DTI)	Your DTI cannot exceed 43% for manual underwriting. The CalPLUS FHA Loan Program may also be available if you have a DTI between 45% and 50%, depending on your credit score.
Income Limits	There are income limits for each county in California, and your income can’t exceed them. Make sure your income does not exceed the county’s limits.
Home Buyer Status	The buyer must be a first-time home buyer.
Home Buyer Education	A home buyer’s education course is required. The CalHFA website lists recommended courses.
Additional requirements	CalPLUS FHA Loan Program applicants must meet the FHA’s income and property requirements, just like CalHFA FHA Loan Program applicants.

CalHFA VA Loan Program

The CalHFA VA loan helps active-duty military members, veterans, and surviving spouses finance their homes. It is a 30-year fixed loan backed by the Department of Veterans Affairs, with lower interest rates than market rates and no down payment required. With CalHFA, you can find the best VA lender.

Requirements for CalHFA VA Loan Program

Requirements	Description
Credit Score	A minimum credit score of 640 is required.
Debt-to-Income Ratio (DTI)	The DTI must not exceed 45% – 50%. Your credit score and other factors determine the maximum ratio.
Income Limits	There are income limits for each county in California, and your income can’t exceed them. Make sure your income doesn’t exceed the limits in your county.
Home Buyer Status	The veteran, active-duty military member, or surviving spouse must meet the eligibility requirements. Visit the VA website to learn more about eligibility.
Home Buyer Education	Most home buyers are required to complete a home buyer’s education course. The CalHFA website lists recommended courses.
Additional requirements	A funding fee is a small percentage of a VA loan’s amount that borrowers are required to pay. You can, however, use the MyHome program to cover these and other closing costs.

CalHFA USDA Loan Program

CalHFA’s USDA Loan Program is ideal for first-time homebuyers seeking a home outside of California’s major cities, specifically those located in what the United States Agriculture Department (USDA) considers rural areas.

A USDA home loan offers many benefits, including 100% financing options and no down payment requirements. A USDA loan from CalHFA has a fixed term of 30 years.

Requirements for CalHFA USDA Loan Program

Requirements	Description
Credit Score	Most lenders require a credit score between 640 and 700.
Debt-to-Income Ratio (DTI)	The DTI must not exceed 45% – 50%. Your credit score and other factors determine the maximum ratio.
Income Limits	You cannot earn more than the USDA income limits for your county. The USDA income limits differ from those in California, so it’s important to ensure you don’t make more than your area’s maximum income.
Home Buyer Status	This is only available to first-time buyers.
Home Buyer Education	A home buyer’s education course is required. On the CalHFA website, you can find recommended courses.
Additional requirements	There must be a rural location for the property. Find out whether a particular location qualifies for CalFHA financing.

MyHome Down Payment Assistance

CalHFA’s MyHome program works with both government and conventional first mortgages.

Those with a government-backed mortgage can apply for a junior loan of up to 3.5% to help with down payments and closing costs. A deferred payment plan lets you defer payments until you sell the home, refinance, or pay off the mortgage.

MyHome loans may also be available to conventional loan borrowers. This junior loan is limited to 3% of the appraised value or the purchase price, whichever is lower.

Forgivable Equity Builder Loan

First-time homebuyers qualify for down payment assistance of up to 10% of their home purchase price under this CalHFA first mortgage program. A buyer who occupies the home as a primary residence during the five years is eligible for loan forgiveness.

There is an income limit. There is typically an income requirement of less than 80% of the median income in the county where the home is located.

CalHFA First-Time Homebuyer Loan Programs Requirements

To help first-time homebuyers obtain fixed-rate loans with the option of rolling in a down payment and closing costs assistance, CalHFA offers conventional and government-insured loan programs.

Borrower Requirements from First-Time Homebuyer Loan Programs

• The minimum credit score for the program is between 660 and 680.
•  Your income must meet CalHFA’s specific income limits.
•  Present a certificate of completion for the CalHFA-approved eHome homebuyer counselling course.
•  You must comply with any additional loan requirements from your CalHFA-approved lender and mortgage insurer.

You can take the approved homebuyer counselling course online for $99 through eHome.

Property Requirements from First-Time Homebuyer Loan Programs

• The sale price can be at most $1,089,300.
•  This property is located within California and is used as a primary residence.
•  There may be some restrictions on condos, accessory dwelling units (guest houses and in-law quarters, for example) and manufactured homes.
•  The program does not apply to land trusts or leaseholds.

How to Qualify for First-Time Homebuyer Programs California?

A first-time homebuyer may qualify regardless of whether they have previously owned a house. In the last three years, you cannot have been a homeowner. Most CalHFA loans are available if you can pay down and close costs.

The CalHFA has established income limits for each county that you wish to buy a home in, which will determine whether you qualify for the specific program.

CalFHA programs require that you complete eHome’s Homebuyer Education and Counseling online course or attend live housing counselling programs offered by NeighborWorks America and HUD-approved housing counselling agencies. The home warranty you buy after closing will also help cover unexpected repair costs.

How to Apply for First-Time Homebuyer Programs California?

The dream of homeownership can become a reality with the help of several first-time homebuyer programs in California. You can apply for a first-time homeowner program as a California resident by following these steps.

Determine Your Budget

The first step in the home-buying process is determining your budget. The first step would be to assess your current financial situation, including your income, savings, recurring debt payments, and monthly expenses. You can determine how much you can comfortably afford in a mortgage by calculating your debt-to-income ratio.

Get Pre-Approved for a First-Time Home Mortgage

Ensure you are pre-approved for a mortgage loan after determining your budget. Mortgage pre-approval is a tentative agreement between a lender and you to provide financing for the purchase of a home. Underwriting for pre-approvals is subject to borrower information, so honestly, list your income and assets.

A maximum loan amount may be provided to you after pre-approval. California also offers a variety of homebuyer programs right now.

The programs offer assistance to homebuyers by partnering with qualified lenders rather than lending directly to them. Contact your Loan Officer to learn about the programs available to you. Borrower programs may have different income and location requirements.

Hire a Real Estate Agent

You can gain valuable insights from friends, family, or colleagues by asking them for recommendations. If you plan to buy or sell a property in a particular area, you can also search online directories or social media platforms for agents who specialize in that area. Before choosing an agent, read reviews and call a few to interview them.

Start the Search for Your Dream Home

The next step in the homebuying process is to find your dream home. Find out what types of homes are available in your area by searching online real estate databases. Find additional homes not listed in public databases if you talk to your real estate agent. Make sure you see at least a few properties before deciding to buy, and note any areas where the house needs improvement.

Make an Offer

The next step is to submit an offer once you find the right property. The following information must be included in your offer letter if you are writing it yourself:

• Information about the buyer and the property’s location
•  Your offer for the home’s monetary value
•  Deposit information for your earnest money
•  You need to specify whether you intend to buy the home with cash or with a loan
•  Before purchase, the seller must make any repairs or adjustments
•  By what date do you need a response?
•  Closing date for your mortgage 

Whether the seller accepts or rejects your offer depends on the seller’s response. You can find out when to accept or leave a deal by consulting your real estate agent.

Conduct a Home Inspection

The closing process can begin as soon as the seller, and you agree on a price. The first step is to schedule an inspection of your home. During your home inspection, the inspector will note any repairs or replacements needed before you move in. An inspection may reveal serious issues you weren’t aware of when making an offer, and you can negotiate the price further down.

Close the Deal and Become a Homeowner

When the home inspection returns clear and you’re ready to purchase, closing your loan is the last step. You must bring identification, closing documents from your lender, and a cashier’s check or proof of a wire transfer for your down payment to the closing meeting. You’re officially a homeowner after closing on your loan.

Tips For First-Time Home Buyers California

The following tips can help make the home-buying process easier for first-time home buyers California now that you know what financing options and programs are available.

Do Your Research

You will feel better prepared as you learn more about the home-buying process. Make sure to research before you jump in by speaking with friends and family and checking out home prices in the neighborhood.

Find A Reliable Real Estate Agent

Communicating with your real estate agent throughout the buying process is important. If you want to buy a home in California, you should work with an experienced agent who knows the market intimately.

These agents can help you find the right neighbourhoods for your financial and family situation, show you homes that fit your budget, and offer other valuable advice. Additionally, they will represent you and negotiate on your behalf.

Get Mortgage Approval

Make your home loan application process easier by getting approved for one. When you have decided on the type of home loan you’d like to apply for, speak with lenders to ensure your initial mortgage approval, also called a preapproval. A clear idea of how much home you can afford will make applying for financing easier and faster once you find your dream home.

FAQs

Does California Have First-Time Buyers’ Programs?

Yes, California offers multiple programs for first-time homebuyers. Obtaining more competitive mortgage rates and deferred payment options through the MyHome Assistance Program is possible.

Is There an Income Limit for First-Time Homebuyers in California?

There are no income restrictions associated with buying your first home in California. Assistance programs have income restrictions that vary depending on your zip code’s average income.

Does My State Have First-Time Homebuyer Programs?

State and local governments and community organizations offer various first-time homebuyer programs, including down payment assistance and other initiatives. You can find state-specific programs by reviewing the HUD’s state listings.

What Are The Mortgage Rates in California?

Several factors influence mortgage rates, including regional housing demand and federal policies. If you compare daily interest rates and keep an eye on how they change, you can purchase a home at a time when rates are affordable.