First-Time Homebuyer Programs in California

The down payment on a new home is often the biggest hurdle for first-time homebuyers. In California, where the average home value is $773,239, a 20% down payment to avoid private mortgage insurance would be $154,648.

Fortunately, first-time homebuyer programs in California can help you achieve homeownership. Mortgages that allow you to put less down on a home are also available, but these usually have income requirements and require mortgage insurance. MoneyGeek explores several state-specific and government-backed first-time homebuyer programs for people from different financial backgrounds.

California offers grants and loans to help first-time homebuyers cover down payments and closing costs. We have compiled the first-time homebuyer programs offered by the California Housing Finance Agency (CalHFA) to help you find the best option for your particular needs and situation.

CalHFA provides two types of 30-year, fixed-rate loans for both conventional and FHA mortgages: CalHFA Conventional or FHA and CalPLUS Conventional or FHA. The standard CalHFA loans offer affordable rates for first-time homebuyers, while the CalPLUS options provide additional support by offering down payment and closing cost assistance. CalPLUS loans generally come with a slightly higher interest rate compared to the standard options.

The CalHFA VA Loan Program offers a 30-year, fixed-rate loan backed by the Department of Veterans Affairs (VA) to eligible veterans and active-duty service members. It can be used to purchase a single-family home or condominium that meet the guidelines of the first mortgage.

CalHFA offers a 30-year, fixed-rate loan backed by the United States Department of Agriculture (USDA) for Californians buying in designated rural areas. It can be combined with CalHFA's down payment assistance program. It's worth noting, however, the USDA loan has its own income limits, which may be more restrictive than CalHFA’s income limits. In this case, the more restrictive limit applies.

The Dream For All Shared Appreciation Loan offers down payment assistance of up to 20% of the home purchase price, capped at $150,000, for first-generation, first-time homebuyers in California. When you sell, move, or refinance your mortgage, you repay the original loan amount plus 20% of the home's appreciation if your income exceeds 80% of the area median income (AMI), or 15% if your income is at or below 80% of the AMI.
To qualify, you must register for a voucher, and recipients are chosen through a randomized drawing. If selected, you will receive an email with detailed instructions and your voucher.

The MyHome Assistance Program offered by CalHFA provides down payment and closing cost assistance for first-time homebuyers using either CalHFA Government Loans or CalHFA Conventional Loans. This program offers up to 3.5% of the lesser of the purchase price or appraised value of the home for CalHFA FHA loans and up to 3% of the lesser of the purchase price or appraised value of the home for CalHFA conventional loans. The assistance is available as a deferred-payment junior loan, meaning no payments are required on it until the home is sold, refinanced or paid off.

Aside from statewide first-time homebuyer programs in California, city-specific programs are also available to help you pursue homeownership in a city of your choosing. Check out the table below for some of the cities in California that provide first-time homebuyer programs for potential residents.

In California, zero-down-payment loan programs allow you to purchase a home without putting money down. USDA and VA loans are two government-backed options that offer no down payment requirements.

USDA loans are a valuable option for homebuyers in rural areas, issued by the U.S. Department of Agriculture through its Rural Development Guaranteed Housing Loan program. These loans are designed to assist low to moderate-income families in purchasing homes in eligible rural areas. With zero down payment options, they offer a pathway to homeownership for those who might not otherwise qualify for traditional loans.

USDA loans provide several benefits, including no down payment and competitive interest rates. They cater to rural homebuyers who meet specific criteria. The loans are backed by the government, reducing the risk for lenders and making them more accessible to borrowers with lower credit scores. Applicants must use these loans to purchase primary residences that are modest in size and value, ensuring the program supports those in genuine need of assistance.

To qualify for USDA loans, your property must be 2,000 square feet or below and located in a USDA-eligible rural area with a population under 35,000. You must also meet income limits, which vary by location. For instance, in Bakersfield, CA, the income limit is $70,300, whereas in Salinas, CA, it is $134,250 for a four-person, low-income household. These income limits ensure the program targets those who need it most, providing an opportunity for homeownership in rural communities.

VA loans are a mortgage option issued by the U.S. Department of Veterans Affairs designed specifically for veterans, active-duty service members, and certain members of the National Guard and Reserves. These loans provide a pathway to homeownership for those who have served, offering unique benefits not available through conventional mortgage options.

VA loans offer several advantages, including the benefit of no-down payment, which can significantly lower the upfront costs of purchasing a home. Additionally, they do not require private mortgage insurance (PMI), further reducing monthly payments. VA loans also generally feature lower interest rates compared to private loans. As of November 2024, the APR for a 15-year fixed-rate VA loan in California is 6.25%, while a 30-year fixed-rate VA loan is 6.37%.

To qualify for VA loans, applicants must meet specific eligibility requirements, including a certain length of service or service commitment, duty status, and character of service. Additionally, income limits based on the applicant's location may apply, and a valid Certificate of Eligibility (COE) is required. Understanding these criteria is essential for potential borrowers to assess their eligibility for this beneficial loan option.

First-time homebuyers in California can take advantage of low-down-payment loan programs that allow them to finance their home with a down payment of 3.5% or less. These programs include conventional, FHA and FHA 203(k) loans.

FHA loans and conventional loans are often compared as they are the two most common types of mortgages. FHA loans require a minimum down payment of 3.5%, whereas conventional loans can require as low as 3% for first-time homebuyers. Conventional loans typically demand stricter credit score and debt-to-income ratio requirements compared to FHA loans.

As of November 2024, the current APR for a 15-year fixed-rate conforming loan in California is 6.02%. In comparison, the APR for a 15-year fixed-rate FHA loan is 6.75%. APRs on FHA loans can be higher due to more fees and extra costs associated with government-backed loans.

To further assist you, use our FHA vs. conventional loan calculator below. It will help you compare both mortgage programs and determine the best option for your financial situation.

We answered frequently asked questions about first-time homebuyer programs in California to help you determine the best option and move closer to achieving homeownership.

Explore additional MoneyGeek resources for first-time homebuyers in California to help you with the homebuying process.