First Time Home Buyer Loans and Programs in California

What are the benefits of first-time homebuyer programs?

First-time homebuyer programs, grants and loans are a form of financial assistance for buyers, usually those who meet certain income restrictions and have strong credit scores. They can apply to those who have never owned a home, or those who owned a home in the past, but haven’t owned one in the previous three years.

Here are a few different ways you could benefit from these programs:

  • Grants: Some areas offer cash to put towards home-related costs, such as your down payment or closing costs.
  • Assistance with closing fees: Some loans place a cap on how much is charged for closing costs.
  • Deferred payments: Some loans won’t charge interest and won’t need to be repaid until the homeowner sells the home, or refinances or pays off the mortgage.
  • Savings on interest: Some organizations offer to pay for or subsidize the interest on the mortgage, or help borrowers qualify for loans with lower interest rates.
  • Loan forgiveness: Homeowners who stay in the home for a certain period of time will have a portion of their debt cancelled (although you could still be liable from a tax standpoint).
  • Down payment assistance: Some programs allow homebuyers to put down a small down payment, or none at all.

Not all of these programs will be available in your area or for your situation. There are also certain restrictions, such as financial need, so do some research or speak with a mortgage professional to see if you qualify. 


What to consider with first-time homebuyer programs

Before seeking out a first-time homebuyer program, make sure you meet the definition of a first-time homebuyer. Many nonprofit and government programs consider you a first-time homebuyer if you haven’t owned a home within the last three years. This includes investors who own rental or investment properties, whether or not it’s considered your primary residence.

Some government-backed programs, such as an FHA or USDA loan, require that the property meets certain standards before qualifying. There could be income restrictions for local and state programs, as well.

Regardless of what programs you may qualify for, purchasing a home is a major financial decision and shouldn’t be taken lightly. That means look at what you can afford, which includes factoring in maintenance costs. Once you figure out a realistic budget, speak to a lender with experience with first-time homebuyers. This might not be your bank — it could be a credit union or other type of lender.

“Lenders who have ample knowledge about first-time homebuyer programs in your area and knowing what you might qualify for can save you thousands of dollars in the long run,” says Diego Corzo, a Realtor with Keller Williams Realty in Austin, Texas.

FHA loan: Best for buyers with low credit and a smaller down payment

Insured by the Federal Housing Administration, FHA loans typically come with smaller down payment and lower credit score requirements than most conventional loans. First-time homebuyers can buy a home with a minimum credit score of 580 and as little as 3.5 percent down, or a credit score of 500 to 579 with at least 10 percent down. If you put down less than 20 percent, however, you will have to pay FHA mortgage insurance, which includes a 1.75 percent upfront fee and annual premiums.

  • Strengths: Credit score as low as 500 accepted; 3.5 percent low down payment option
  • Weaknesses: Mortgage insurance; home must meet FHA requirements


CALFHA Plus Program- Good for No Money Down

The CalPLUS FHA program is an FHA-insured first mortgage with a slightly higher 30 year fixed interest rate than our standard FHA program and is combined with the CalHFA Zero Interest Program (ZIP) for closing costs.

Review the sections below to find out more about the CalPLUS FHA program.

Borrower Requirements

  • Occupy the property as a primary residence; non-occupant co-borrowers are not allowed.
  • CalHFA borrowers must complete homebuyer education counseling and obtain a certificate of completion through an eligible homebuyer counseling organization.
  • Meet CalHFA income limits for this program.

*In the case of conflicting guidelines, the lender must follow the more restrictive.

Property Requirements

  • Be a single-family, one-unit residence, including approved condominium/PUDs
    • Guest houses, granny units and in-law quarters may be eligible
  • Manufactured housing is permitted
  • Condominiums must meet the guidelines of the first mortgage

*In the case of conflicting guidelines, the lender must follow the more restrictive.

Interest Rate

What is the interest rate?

Interest rates will vary depending on your financial circumstances, lender fees, and other factors. Interest rates can also change daily. We recommend that you check with a CalHFA-approved loan officer to receive an accurate rate quote for this program.

CalHFA does not lend money directly to consumers. CalHFA works through and uses approved lenders to qualify consumers and to make all mortgage loans. The fees you pay could be different depending on the lender and the program. View sample Annual Percentage Rates (APRs) here.

Homebuyer Education Requirement

CalHFA firmly believes that homebuyer education and counseling is critical to the success and happiness of a homeowner, and requires homebuyer education and counseling for first-time homebuyers using a CalHFA program.

Who has to take this Homebuyer Education and Counseling course?

Only one occupying first-time borrower on each loan transaction.

How do I take this education and counseling course?


 VA loan: Best for active-duty military, veterans and their spouses

Qualified U.S. military members (active duty, veterans and eligible family members) can apply for loans backed by the U.S. Department of Veterans Affairs, or VA. VA loans are a great deal because they come with lower interest rates compared to most other loan types and don’t require a down payment. Borrowers, however, will need to pay a funding fee, but it can be rolled into your monthly loan costs. Some service members may be exempt from paying this fee, as well.

  • Strengths: 100-percent financing; no mortgage insurance
  • Weaknesses: Funding fee; limited to honorably-discharged eligible military members

Good Neighbor Next Door: Best for buyers employed in public service

The Good Neighbor Next Door program, sponsored by the U.S. Department of Housing and Urban Development (HUD), provides housing aid for law enforcement officers, firefighters, emergency medical technicians and pre-kindergarten through 12th-grade teachers. Through the program, borrowers can receive 50 percent off a home in a “revitalization area,” provided they live in the home for at least three years. You can search for properties available in your state on the program’s website.

  • Strengths: 50 percent discount on list price
  • Weaknesses: Limited to borrowers in certain public service professions; limited properties; longer-term commitment required

FHA 203(k) loan: Best for buyers or investors of homes that need work

Backed by the FHA, an FHA 203(k) loan can help you if you’re buying a fixer-upper. This type of loan allows you to borrow funds needed to pay for home improvement projects and roll the costs into one loan. The improvements must cost more than $5,000 and you’ll need to make a minimum 3.5 percent down payment. You’ll also want to make sure you’re working with a contractor who is familiar with 203(k) loans and their timeline.

  • Strengths: Low down payment; one mortgage payment; ability to finance more expensive improvements
  • Weaknesses: Limited to $35,000 in repairs; larger mortgage payments

State and local first-time homebuyer programs and grants: Best for first-time buyers who need down payment assistance

Many states and municipalities offer first-time homebuyer grants (which don’t have to be repaid) and low-interest mortgage programs. Check your state’s housing finance authority website or contact a real estate agent or local HUD-approved housing counseling agency to learn more about first-time homebuyer loans in your area.

  • Strengths: Down payment and closing cost assistance; lower-interest mortgages
  • Weaknesses: Income limits; buyer education course usually required

GSFA provides down payment assistance (DPA) programs to help California homebuyers purchase a home with little-to-no money out of pocket.

Programs are available for purchase or refinance of a primary residence anywhere in California and there is no first-time homebuyer requirement to qualify.

Energy-efficient mortgage (EEM): Best for buyers interested in an energy-efficient home

Making green upgrades can be costly, but you can get an energy-efficient mortgage (EEM) (either a conventional loan or one backed by the FHA or VA) to help finance them. This type of mortgage allows you to tack the cost of energy-efficient upgrades (think new insulation, a more efficient HVAC system or double-pane windows) onto your primary loan, without requiring a larger down payment.

  • Strengths: Can make energy-efficient improvements upfront with no additional down payment or need to requalify
  • Weaknesses: Larger mortgage payments; must obtain energy assessment and follow loan requirements for upgrades

Read more about energy-efficient mortgages (EEM).

Learn more:

  • First-time homebuyer resources
  • First-time homebuyer guide
  • How to get a mortgage with poor or bad credit