California Housing Finance Agency (CalHFA) was created in 1975 and is the chartered affordable housing lender for the State of California. This agency supports both renters and home buyers; it offers financing for low-to-moderate income California residents for first mortgages, and offers down payment assistance to those who qualify.
There are many options for qualifying applicants to consider, including conventional home loan options under two CalHFA programs.
The CalHFA Conventional program is offered as a fixed-rate, 30-year first mortgage loan. These loans are for single-family, one-unit properties and can include approval for manufactured homes, approved condos, and planned unit developments.
This loan program is offered in partnership with a network of local lenders; CalHFA does not lend money itself via this program. Home buyer education is required as a condition of loan approval; applicants must take an approved course and receive a certificate of completion.
The homebuyer education courses may be taken online, in-person, or virtually. The online option is by eHome America, and is eight hours long. There is a fee for this course. The CalHFA official site notes this is the ONLY online option approved by CalHFA, all others lack a crucial piece of the program in the form of a one-on-one housing counseling session.
In-person and virtual training is available through any HUD-approved housing counseling agency or through Neighborworks America.
The CalHFA Conventional Loan program offer is need-based and there are income limits set annually for this program.
CalHFA does not lend the money for these loans; applicants will need to work with a participating lender (there is a Find A Loan Officer feature on the CalHFA official site) and your lender will talk you through that financial institution’s application process. You will need to state up front that you seek a mortgage loan through the CalHFA Conventional program.
When working with a participating lender for the first time, remember that you should gather crucial paperwork including your employment and pay history, bank statements, tax returns from the last two years, and any supporting documentation about your finances.
The CalHFA program called CalPLUS is a conventional loan program offering a fixed-rate first mortgage “with a slightly higher 30 year fixed interest rate than our standard conventional program,” according to the official site.
This loan is combined with the CalHFA Zero Interest Program (ZIP) for closing costs, which means you can apply for a deferred payment zero interest junior loan for up to 3% of the first mortgage loan amount.
Under Conventional Plus, applicants must occupy the property as their primary residence; and non-occupant co-borrowers are not permitted. Like other CalHFA programs, homebuyer education is required as a condition of loan approval. These required homebuyer education courses include online and in-person options.
One of those is offered via eHome America, and is eight hours long which includes an opportunity for one-on-one counseling as well as a group setting. This is the ONLY online option of its type approved by CalHFA. There are also in-person and virtual training options available through any HUD-approved housing counseling agency or through Neighborworks America.
This loan program has some restrictions. Like other CalHFA programs the property securing the loan must be a one-unit residence, with manufactured homes and condo units allowed. However, the guidelines for CalPLUS make a point of noting that leaseholds, land trusts, and Co-ops do not qualify.
CalHFA does not lend the money for CalPLUS loans. You should shop around for a participating lender via the Find A Loan Officer feature displayed on the CalHFA official site. Once you find a suitable lender, a loan officer will explain that financial institution’s application process, and be sure to mention that you are interested in a CalPLUS loan specifically as early in the conversation as possible.
Not all applicants will qualify–this is a need-based loan with income restrictions which are established every year; if you exceed the income limits for the program you will be denied the loan.
When working with a participating lender for the first time, remember that you should gather some important documents first. These will include employmsent and pay history, bank statements, tax returns (likely needed from the last two years), and employment information.
Applying for a conventional mortgage in Orange County may be the best way to go if you have good credit and want to save money over the lifetime of the loan. Credit score requirements can be higher for conventional home loans than for some government-backed mortgages.
But conventional loans can be more affordable because your interest rates may be lower (based on credit scores) and the mortgage insurance premium you pay may also be lower than a government-backed loan where applicable.
Your goals for the home are important; government-backed mortgages are typically good for borrowers who need a lower down payment and a lower monthly mortgage. These borrowers may be prepared to spend more money over the lifetime of the loan as a trade-off; paying more over time helps when the monthly payments and up front costs are lower.
Conventional loans can be more expensive for borrowers with lower FICO scores, higher interest rates are typically offered to these borrowers. Borrowers who apply for conventional loans should expect to pay mortgage insurance unless they put 20% down at closing time or it may be possible to cancel the insurance when home equity reaches 20%.
Those using conventional mortgages can purchase a primary residence or an investment property; government backed loans typically don’t allow the purchase of a house you don’t intend to use as your home.
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Joe Wallace has been covering real estate, mortgage and financial topics since 1995. His work has appeared on ABC, The Pentagon Channel, Veteran.com plus a variety of print and online publications. He is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News.