If you are a first-time home buyer looking for a home in Orange County, you may be eligible for down payment assistance programs offered by the California Housing Finance Agency, also known as CalHFA. This agency was created in 1975 and was chartered to serve as the State of California’s affordable housing lender according to the CalHFA official site.

CalHFA typically does not lend money directly but rather uses a network of lenders. You’ll be required to choose one in order to use these programs. Credit requirements, employment, and other requirements may vary depending on the lender.
The CalHFA Single Family Division offers down payment assistance to first-time homebuyers, and the program is paid for using bonds and mortgage loan revenue rather than using taxpayer dollars. Qualifications for these programs may vary, we explain them below.
California Down Payment Assistance Programs
There are multiple options for down payment assistance from CalHFA. They are offered in the form of forgivable “silent second” loans, and options include:
CalHFA Forgivable Equity Builder Loan: Offered to first-time home buyers, this is a forgivable subordinate loan for up to 10% of the purchase price. This loan is only forgivable if the borrower uses the home as their primary residence for five years. This option can only be used with a CalHFA first mortgage.
CalHFA Government Loans: This is for borrowers who want an FHA mortgage and features a deferred-payment junior loan for either 3.5% of the purchase price or the appraised value (whichever is lower) to be used toward down payment and closing costs.
CalHFA Conventional Loans: This is offered as a deferred-payment junior loan up to 3% of the purchase price or the appraised value (whichever is lower) that can be used to pay down payment and/or closing costs.
CalHFA Forgivable Equity Builder Loan
The CalHFA Forgivable Equity Builder Loan offers “immediate equity” to qualifying first-time homebuyers. This is done via a silent second loan up to 10% of the purchase price of the home. This loan is forgivable after five years and is for owner-occupiers only.
You can only use this program with a CalHFA first mortgage. What does it take to qualify?
- First-time homebuyers
- Those who have not owned a primary residence in three years
- Owner/occupiers only; no non-occupying co-borrowers
- Must meet Fannie Mae income restrictions
- Must complete a homebuyer education course
There are specific property requirements for this loan option. They include but are not limited to the following:
- Single-family, one-unit residences
- Approved condominium units or PUDs
- Guest houses
- “Granny units” and “mother-in-law apartments” may qualify
- Manufactured homes
Loan forgiveness may have tax consequences; CalHFA will send you a 1099 every year once the loan is partially forgiven. You will need to talk to a tax professional about your rights and responsibilities related to the 1099 form when the time comes. Tax laws change frequently and what was an option last year may not be possible in the current tax year.
CalHFA MyHome Assistance Program
There are two silent second loans you can use as down payment assistance under the MyHome program:
CalHFA Government Loans (FHA)
This is a deferred-payment junior loan (up to 3.5% of the purchase price or appraised value) you can use to make your down payment, pay closing costs, or both. This option is only for those using an FHA mortgage. Certain borrower requirements apply, as do certain property guidelines. They include, but may not be limited to, the following:
- The property must be a single-family, one-unit residence
- The property may be a condo unit or PUD
- Eligible properties may include guest houses, “granny units” or mother-in-law apartments
- Manufactured housing may qualify
CalHFA rules say condo units financed under this program must “meet the guidelines of the first mortgage” which in the case of an FHA mortgage means no right of first refusal or other restrictive covenants in the Condo Owner’s Association bylaws that prevent you from freely disposing of the property.
Who qualifies for this program?
- First-time home buyers
- Those who have not owned a home in the last three years
- Those who intend to use the home as their primary residence
- Those who meet certain income limits
Borrowers must complete homebuyer education as a condition of approval.
CalHFA Conventional Loans
The MyHome program includes an option for a deferred-payment junior loan up to 3% of the purchase price or appraised value (whichever is less) to be used for the down payment and/or closing costs. This option is specifically for conventional loans.
This is a deferred-payment junior loan you can use to make your down payment, pay closing costs, or both. Certain borrower requirements apply, as do certain property guidelines. They include, but may not be limited to, the following:
- The property must be a single-family, one-unit residence
- The property may be a condo unit or PUD
- Eligible properties may include guest houses, “granny units” or mother-in-law apartments
- Manufactured housing may qualify
Who qualifies for this program?
- First-time home buyers
- Those who have not owned a home in the last three years
- Those who intend to use the home as their primary residence
- Those who meet certain income limits
Like the FHA version of this program, applicants must complete homebuyer education as a condition of approval.
Interest Rates And Other Issues
Interest rates offered will depend on current market conditions, and may vary by lender. Remember, CalHFA does not loan money directly, it relies on a network of participating lenders.
The rates offered will depend on the lender, your FICO scores, and other factors. Lender fees and other costs may also vary depending on the transaction, the lender, and your financial data (where applicable). The terms and conditions of CalHFA programs do not vary among lenders but you may encounter additional requirements based on lender standards.
CalHFA Homebuyer Education Requirement
The programs listed above all have a homebuyer education and counseling requirement. There are two ways to fulfill that requirement. One is by taking an online, eight-hour Homebuyer Education class which has a fee.
This class is not interchangeable with shorter or less interactive options such as Frameworks and HomeView because there is no option for one-on-one counseling. When in doubt, contact CalHFA for more information.
The other homebuyer counseling option is an in-person or virtual “live” course offered via any HUD-approved housing counseling agency. You can call HUD at (800) 569-4287 to get a referral to a local, HUD approved agency.
Remember, CalHFA rules say only one occupying first-time home buyer is required to take this course for each loan, if there are multiple borrowers you don’t all have to attend.
What To Remember About Down Payment Assistance
Be sure to read the terms and conditions carefully. You will want to know the consequences for late payments, missed payments, failure to maintain the home as your primary residence as per CalHFA guidelines, etc.
The consequences of some problems are out of the hands of CalHFA such as a failure to pay property taxes or homeowner association dues. Know your rights and responsibilities before you commit; you’ll be glad you did.
If you get into financial trouble and have difficulty paying your mortgage, contact both your lender and CalHFA to learn what foreclosure avoidance options might be open to you. It’s better to act sooner rather than later; the more payments you miss, the more restricted your options may be for saving your home.
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