There are multiple California first time home buyer programs and the options to find affordable housing have changed in recent years; if you haven’t explored your options lately you may find more than a few changes to certain options.
Buying your first home in the state can be intimidating at first, but fortunately there are many options for you to consider including government-backed loans, conventional mortgages, closing cost assistance, and much more.
The programs listed below have terms and conditions subject to change. The information presented here is accurate at press time but you’ll want to check the official site for each one you are considering to make sure you have the most up-to-date information on program options.
Changes in lender policy, state law, or even federal law may affect the programs and services you are trying to obtain. Be sure to ask about your first-time home buyer options with each lender you compare.
CalVets Home Loans
CalVets Home Loans are offered by the State of California to those who have qualifying military service.
You do not have to be a California veteran to qualify for this option–military service in the state is not required, you just have to have served the minimum time in uniform (see below).
According to the CalVets official site, any veteran “purchasing an owner occupied home in California” is eligible. This was not true in the past, so if you have not explored your options in a while it is smart to revisit this program.
Here are the qualifying details for the loan. You qualify when:
- You served on active duty a minimum of 90 days not including active duty for training purposes only.
- You were discharged under honorable conditions.
- National Guard or reservists who have been ordered to active duty, including Active Guard/Reserve (AGR) duty may also apply.
CalVets home loans have options that use your VA loan entitlement, but there is also an option that does not use VA entitlement. That program is called Cal97.
CalHFA VA Loan Program
CalHFA started in 1975 and provides affordable homes to qualifying applicants through a network of preferred loan officers. CalHFA is chartered as California’s affordable housing lender and offers both home loans and down payment assistance, depending on the program
The CalHFA VA program is for those who qualify for VA mortgages. The CalHFA VA Loan program is a 30-year, fixed-rate mortgage with zero down required. Income limits, homebuyer education, and occupancy are all required under the CalHFA VA Loan program.
Non-occupying co-borrowers are not approved for these loans and you are required to have or obtain a VA Loan Certificate of Eligibility for this option.
CalHFA has other first-time home buyer programs for those who are not eligible for VA mortgages.
CalHFA Forgivable Equity Builder Loan
The Forgivable Equity Builder Loan offers first-time homebuyers the opportunity to get started building equity in the home immediately thanks to a forgivable loan for up to 10% of the purchase price of the home.
The borrower must continuously occupy the home as their primary residence for five years or more. This is a subordinate loan and can only be used with a CalHFA first mortgage (see below).
The Forgivable Equity Builder Loan is a forgivable subordinate loan program that may only be used with a CalHFA first mortgage. You must be a first-time home buyer, and the home must be your primary residence. Non-occupant co-borrowers are not permitted. Income limits may apply. Home buyer education is a requirement and a condition of loan approval.
CalHFA FHA Loan Program
CalHFA FHA loans are offered through a network of participating lenders who have partnered with CalHFA. This is an FHA-insured loan featuring a CalHFA 30-year fixed interest rate first mortgage.
These are mortgages for owner-occupiers only, and non-occupant co-borrowers are not permitted. Homebuyer education is required and there are income limits you must meet to qualify.
Homes permitted under this program for first-time home buyers include manufactured homes, condo units, granny flats and guest houses. Condo units must “meet the requirements of the first mortgage” according to the official site.
There is another CalHFA FHA loan program called CalPLUS, which has a higher fixed interest rate but is combined with a program called CalHFA Zero Interest that is meant to help with closing costs. Homebuyer education is required.
CalHFA USDA Program
The CalHFA USDA Program offers, as the name implies, a USDA Guaranteed 30-year, fixed rate first mortgage loan. Income restrictions may apply, homebuyer education is required as a condition of loan approval, and non-occupying co-borrowers are not permitted.
As a first-time home buyer you may combine this loan with the MyHome Assistance Program. This program is a bit different than the others because USDA loans require the home to be purchased within a USDA rural zone. Other requirements for the property include:
- Must be a single-family, one-unit residence.
- Condominium/PUDs, guest houses, granny flats and in-law quarters may qualify.
- Manufactured housing is permitted but this may be on a case-by-case basis.
These loans, like other CalHFA mortgages, are offered through a network of participating lenders. You will need to contact a lender to get started.
CalHFA Conventional Loan Program
The CalHFA Conventional program is a 30-year, fixed-rate first mortgage loan offered through a network of participating conventional lenders. Unlike some of the other options listed above, the official site lists no prohibition on non-occupying co-borrowers. Income restrictions may apply and homebuyer education is required.
Eligible properties for this program include single-unit homes for owner-occupiers. You can apply for a loan to purchase a condo unit, manufactured home, guest house, granny flat, etc.
Another program is the CalPLUS Conventional program, offering a higher interest rate on 30-year fixed-rate mortgages but combining the loan with the CalHFA Zero Interest program to help borrowers deal with closing costs. Income limits apply, homebuyer education is required, and you must occupy the home as your primary residence.
What To Know About California First Time Homebuyer Programs
As you may have gathered from the above, home buyer education is a requirement for many of these first-time home buyer options.
These courses can be offered online or in person, with online classes typically running about eight hours total. Some first time home buyer programs offer down payment assistance options while others may not, it’s important to ask several lenders what options may be available through them as a first-time buyer.
Government mortgages typically do not automatically favor first-time buyers or offer them perks; typically it’s the lender or a third party program offering assistance for first time buyers. If you have owned property before, it’s not a good idea to assume you do not qualify as a first-time home buyer.
The reason for this is that most states define a first time home buyer as someone who has not owned a home in the last three years.
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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.