Mortgage Overview
CONVENTIONAL LOANS
CalHFA and CalPLUS Conventional Programs
About: These programs have a 30-year fixed term. The first mortgage loans are completely insured by private mortgage insurance that is present on the conventional market. In order to receive this loan, you have to go through the homebuyer education counseling to get your certificate of completion. There are also specific CalHFA income limits you need to meet in order to utilize these types of conventional loan programs for your first home purchase. You should always follow the most restrictive requirements when using these programs so you can ensure that your loan will be approved quickly.
Overview: Both the CalHFA and CalPLUS loans are part of the conventional loan program in California. Additionally, they are both supported by fixed rate mortgages that will last you for a 30-year term. The only difference between the two is the fact that CalPLUS is fully amortized. These are considered conventional because the loan prices and requirements are standard when compared to the other loan options you may have. These must be privately insured in order for the interest rates to be considered standard as well. Fortunately, there are other programs you can combine these mortgage options with in order to receive the best financial assistance that’s just right for you.
Pros & Cons: The most attractive benefit with these mortgage programs is the fact that they can be paired with other financial assistance programs as well. This will give you the best chance to receive the type of monetary help you need to successfully make your purchase as a first-time homebuyer. Additionally, you can customize your loan to truly work for your benefit. There aren’t many deterrents associated with this loan given it follows the usual protocols for conventional loans. These conventional loans are going to be the key factor in your ability to make a successful first-time purchase for yourself. The only deterrent associated with the CalPLUS Conventional Loan Program is the fact that is as slightly higher interest rates.
Summary: If you are someone who wants to purchase a home in California for the first time, you should strongly consider utilizing one of these loan options. These are standard loans that will help you with your closing costs and down payments. There aren’t any tricks or major risks associated with these conventional loans so you can feel secure and confident in the fact that you will be making a good decision for the future of your new property. You can pair either one of these conventional loans with the CalHFA Zero Interest Program or the Extra Credit Teacher Home Purchase Program. If your annual income doesn’t exceed the county limits that range from $118,550 to $228,300, then you are most likely going to be eligible for this loan given you meet the other standard requirements.
GOVERNMENT LOANS
CalHFA FHA Program
About: This is a program that utilizes insurance from the Federal Housing Administration to offer recipients a 30-year fixed-rate loan. To be eligible for this program, there are certain requirements you must fulfill as a home buyer. When you deciding to buy your first home in California, you need to purchase it as your primary residence. If you are planning to be a co-borrower, then you will not be eligible to purchase a home. When you decide to borrow money from this program, you have to complete the homebuyer education counseling that is going to give you the proper credentials to make your official purchase. This includes an eight-hour course that is help completely online. This provides you with the one-on-one counseling sessions you need to understand all of your options as a first-time home buyer in the state of California.
Overview: If you want low mortgage rates for your first home purchase, the CalHFA FHA Loan Program is the one for you. The United States Federal Housing Administration is the main contributor to this loan for people in California who need financial assistance. Compared to conventional loans, the FHA loans prove to be a safer option for the institutions who are lending the money. The lower interest rates of 3.5% are represented by the fact that the federal government is the main supporter of these loans. People who use this loan must have a minimum of 660 for their credit score as well as a DTI ratio of no higher than 43%. Additionally, your annual income can’t exceed that of California’s average income limit in order for you to be eligible for this loan.
Pros & Cons: The CalHFA FHA loan can easily be paired with other financial assistance programs that are designed to help you make your first home purchase. Also, this loan has much more reasonable credit requirements than other loan programs. Unfortunately, you will most likely have to deal with higher upfront costs with this loan given the interest rate for the loan is so low. You will also need to pay a strict mortgage insurance given the FHA loan does not have very flexible requirements in comparison to conventional loans. Due to these slight deterrents, you should always try to get a conventional loan even if you think you might not be approved.
Summary: If you have a history of bad credit, the CalHFA FHA loan is a great pick for you. You will be able to receive the financial assistance you need to buy your first home in California without worrying about extremely high interest rates. In some cases, you also may not have to put too much money down initially but this concept may vary depending on the current state of your credit score value. You should always try to get a conventional loan first because those usually have more flexible requirements given you have proven that you have a solid line of credit. If you aren’t able to secure a conventional loan for your purchase, then the CalHFA FHA loan will definitely help you out.
CalPLUS FHA Loan Program
About: Compared to the CalHFA FHA program, this has a higher 30-year fixed rate, but you can combine it with other programs that will provide you with the financial assistance you need to purchase your first California home. The requirements to borrow within this loan program are very similar to those for the CalHFA FHA program. Your new home needs to be your primary residence so you can’t try to live there in a co-borrower status. This must be a single-family residence with the exception of guest house and granny unit additions. Moreover, your property can’t exceed the five acre maximum although you are allowed to have manufactured housing.
Overview: If you want to borrow the FHA loan but you need some more money to help you successfully pay off your closing costs, this loan program is for you. The same features associated with the CalHFA FHA loan are present within this loan as well. The only difference is the fact that you can also use ZIP loans to assist you in paying off your closing costs. This is a similar statute that is present in CalPLUS conventional mortgages. These ZIP loans can be used as 2% or 3% of the total amount of your loan while also having a 0% deferred payment interest rate throughout the entire lifespan of your mortgage loan.
Pros & Cons: The pros and cons associated with the CalPLUS loan are the same as those for the CalHFA FHA loan. You can easily combine the CalPLUS loan with other ZIP loans to help you pay for your first home. Also, this loan has much more reasonable credit requirements than other loan programs. Unfortunately, you will most likely have to deal with higher upfront costs with this loan given the interest rate for the loan is so low. You will also need to pay a strict mortgage insurance given the FHA loan does not have very flexible requirements in comparison to conventional loans. Due to these slight deterrents, you should always try to get a conventional loan even if you think you might not be approved.
Summary: This loan has the same foundational requirements as the CalHFA FHA loan so you can expect to need the same credit score value to utilize it. If you live in a single-family home that stays in accordance with the country price guidelines, then you will most likely qualify for this loan. The lower interest rates usually draw in new home buyers because they are able to make their purchase without worrying about having to pay back a lot of money on top of the initial price. Even with a lower credit score, you can feel confident in your ability to utilize this loan to purchase your very first home in California.
CalHFA VA Program
About: This loan program will provide you with a 30-year fixed-rate loan that is completely insured by the United States Department of Veterans Affairs. The eligibility requirements are very similar to those being offered by the other CalHFA loan programs. You must consider this your primary residence so you aren’t able to utilize this new home purchase in a co-borrower status. To officially acquire this loan, you need to have the proper supporting documents for eligibility that include a valid certificate that accurately follows all VA guidelines.
Overview: This CalHFA VA loan program is mostly for current military personnel, veterans who are residents of California, or the surviving spouses of people who have served in the armed forces. The loan specifically helps people who are currently in the military or were formerly parts of the military. You want to purchase your first home without feeling an extreme financial burden and this loan exists to help you do just that. The Department of Veterans Affairs completely funds this loan so it can be utilized by those who meet the necessary requirements. These requirements are the same as those being used for the CalHFA FHA loan program as well.
Pros & Cons: Given this is also a government loan program, it has the same pros and cons as CalHFA loans. The CalHFA VA program can easily be paired with other financial assistance programs that are designed to help you make your first home purchase. Also, this loan has much more reasonable credit requirements than other loan programs. Unfortunately, you will most likely have to deal with higher upfront costs with this loan given the interest rate for the loan is so low. You will also need to pay a strict mortgage insurance given the FHA loan does not have very flexible requirements in comparison to conventional loans. Due to these slight deterrents, you should always try to get a conventional loan even if you think you might not be approved.
Summary: You will most likely qualify for the CalHFA VA loan program if you are a current active-duty military member, a veteran, or the surviving spouse of someone who has previously served in the armed forces. There are a few other credit related requirements you must meet in order to be eligible and these are similar to those supported by the CalHFA FHA and CalPLUS loan programs. If you’ve served the country, you deserve to be able to purchase the home you want for the very first time.
CalHFA USDA Program
About: This program gives you a 30-year fixed rate loan that is guaranteed by the USDA. All of the usual requirements for CalHFA loans apply here including the fact that you can’t be considered a co-borrower on this property. This home purchase must be considered your primary residence. Also, you must meet the USDA Income Limit Eligibility requirements to utilize this specific loan program for your purchase. After you complete the homebuyer education counseling, you will receive a certificate that is going to make your eligibility status official.
Overview: This loan program is for you if you are trying to purchase a home that is located in the more rural area of the state of California. If the major cities of California aren’t necessarily for you, then the CalHFA USDA loan program definitely is. Your annual income value cannot exceed that of the USDA income limits associated with each county. The property you are wanting to buy must also be located within a rural area of the state of California.
Pros & Cons: All of the CalHFA loan programs have the same attractors and deterrents given they all fall under the same government loan category. The CalHFA USDA loan has much more reasonable credit requirements than other loan programs. Unfortunately, you will most likely have to deal with higher upfront costs with this loan given the interest rate for the loan is so low. You will also need to pay a strict mortgage insurance given the FHA loan does not have very flexible requirements in comparison to conventional loans. Due to these slight deterrents, you should always try to get a conventional loan even if you think you might not be approved.
Summary: If usual hustle and bustle of the major California cities is too much for you to handle, that’s no problem at all. The CalHFA USDA loan program is going to give the loan you need in order for you to purchase your dream home in rural California. As long as you meet the minimum credit score and debt-to-income ratio requirements, you will most likely be approved for this loan. Your credit score just needs to be above 660 and your debt-to-income ratio can be no higher than 43%. Make sure you read up on the specific requirements set forth by the USDA to make sure you are meeting those in order to get your loan so you can purchase your new home as soon as possible.
FINANCIAL ASSISTANCE FOR DOWN PAYMENTS AND LOANS
MyHome Assistance Program
About: This program provides you with up to 3.5% of your home’s purchased price to help you make the necessary down payment you need in order to buy your first home. Although this percentage usually holds true, there is a maximum value you are eligible to receive when using this assistance program. You cannot acquire more than $11,000 to help you make your down payment. Fortunately, you don’t have to worry about paying back this loan until you are in the market to sell or refinance your property. This concept holds true because the program is a deferred-payment junior loan.
Overview: In general, this is considered a deferred-payment junior loan which allows you the flexibility to only worrying about paying it back when you sell, refinance, or completely pay off your home. Usually, low to moderate income first-time home buyers choose this loan as their main financing option. A s a first-time home buyer in California, you can easily use this loan to help make your down payment. The best part is you can combine this loan with a CalHFA mortgage loan to help you completely cover all of the costs necessary to close on your new house. Make sure you pay close attention to the 3.5% or $11,000 cap that is placed on the loan so you ensure you will have enough additional money to make your down payment after you reach the $11,000 limit.
Pros & Cons: The 3.5% amount is actually an extremely competitive value when it comes to the loan market. This amount is generous and most people who are within the low to moderate annual income range will be able to utilize this amount to make their down payment. Additionally, you don’t have to worry about paying this off until you sell, refinance, or pay off your home. This is an extremely attractive factor for most given they will not have the amount of funds necessary to begin paying off their loan after already making such a large purchase. Unfortunately, there are various stipulations within the application process that deter people who are potentially thinking about utilizing this loan option. Just make sure you do all your research before getting started on your application.
Summary: The MyHome Assistance Program can be a great option for you if you fall into the low to moderate annual income range and you are in the market to buy your first home in California. There are strict stipulations that accompany that application process so make sure you understand all of those before you get started. Other than that, this can be a great option for you to use given you will have help making your down payment or completing the costs of closing. It is important to note that you have to have a CalHFA first mortgage loan in order to take advantage of the benefits the MyHome Assistance Program has to offer.
The School Teacher and Employee Assistance Program
About: This program helps administrators who also want to become first-time home buyers in the great state of California. The overarching title of “administrators” includes teachers, staff members, and all school district employees who work in the K-12 public schools located in California. The people who choose to utilize this loan will receive funds that include up to 4% of the purchase price. This money goes towards their overall down payment or closing costs.
Overview: Anyone who is considered an administrator within the California’s K-12 public schools can use this loan to purchase their first home in California. Once you get your second mortgage, you can receive up to 4% of the purchase price back in your own pocket. Due to the eligibility requirements and benefits it provides, this loan is only given to certain people within California. This loan is only for administrators, employees, and teachers who work in K-12 public schools. Also, you must be purchasing a single-family home as a first-time homebuyer to meet the necessary requirements.
Pros & Cons: The most attractive factors associated with this loan have already been specified, but they are as follows. You can get a loan that is up to 4% of your home’s total value. This money is to be used towards your down payment or overall closing costs. Also, you don’t have to pay anything back for the loan until your sell, refinance, or completely pay off the cost of your home. The only deterrent associated with utilizing this loan is that it can only be combined with the CalHFA first mortgage loan. Although there is only one choice, this combination is great and it should sufficiently meet all your financial needs.
Summary
If you are someone who works within the K-12 public schools in California, you are most likely eligible to utilize this loan. You can use this loan in combination with other loans associated with CalHFA. The School Teacher and Employee Assistance Program can be used in combination with some of the first-time homebuyer mortgages that were created through CalHFA. This will help you accumulate all the funds you need to pay for your down payment as well as all the costs associated with the final closing on your new house. If you meet all the above requirements and don’t have quite enough money to pay for your down payment, this loan is perfect for you.
CalHFA Zero Interest Program
About: The CalHFA Zero Interest Program is also called the “ZIP loan”. This is a second mortgage that you can use in combination with other CalPLUS loans. Utilizing this loan will allow you to own a home more easily because you will be able to afford the costs associated with your first purchase. When you are borrowing money, you will have a zero-interest loan with a value of up to 3% of your first mortgage.
Overview: This program is for the low-income buyers who are purchasing a home for the very first time. The CalHFA Zero Interest Program also falls into the category of a junior loan. This means you can defer the payments for quite some time. You can continue to defer these payments for the entire duration that you’re living in your purchased home. Unfortunately, if you ever default on a mortgage, you will have to start paying this loan back so you need to make sure all your financial affairs are in order before you borrow the money from this program.
Pros & Cons: With this program, you will receive up to 3% of your total loan amount which is provided as a no-interest second loan. Also, the loan terms for the CalHFA Zero Interest Program match those of the CalPLUS loan term so you can combine the two loans to work best for your financial needs. As long as you are living in your house and utilizing the loan, you don’t have to worry about paying it back. You don’t want to default on any of your mortgages because then you will have to instantly start paying back this loan even if you don’t have the finances to do so. This could unfortunately be a very quick way of getting yourself into major debt that might cause you to go bankrupt. Before receiving this loan, you need to make sure you will always have the funds you need to pay off your house as you agreed to in your mortgage contract.
Summary: This program is great for any California resident who is looking to purchase their first home. You can use this program in combination with CalPLUS FHA and CalPLUS Conventional loans to ensure the entire home buying process is much more affordable and convenient for you. The CalHFA Zero Interest Program will pay some of your down payment as well as your closing costs to help you purchase the home you want without having to worry too much about the financial burden you would endure if you were paying completely out of your own pocket upfront. It’s hard not to take advantage of a great deal like this.