The California Housing Finance Agency (CalHFA) was established in 1975. CalHFA provides home financing and down payment assistance programs for low to moderate income Californians.
If you take out an eligible CalHFA first mortgage loan, you may be eligible for additional CalHFA down payment assistance:
- MyHome Assistance Program, which can be combined with the Zero Interest Program (ZIP)
- ECTP – Extra Credit Teacher Home Purchase Program
- Cal-EEM + GRANT – Energy Efficient Mortgage with Grant
- MCC – Mortgage Credit Certificate Tax Program
UPDATES: On April 5, 2016, CalHFA announced a program change to help more Californians qualify for CalHFA conventional mortgages. In 35 counties, they have increased the maximum qualifying income from 120% to 140% of the County’s median income. For example, for a four-person household in San Diego County, the income limit has increased from $91,100 to $106,250.
On July 18, 2016, the income limits for all programs, and sales price limits for the MCC Program, have changed. The new amounts are described below.
On August 22, 2016, the simple interest rate was lowered to 2.5% for My Home and Extra Credit Teacher Purchase programs.
On September 6, 2016, the ECTP Program will include all K-12 teachers and employees, including public charter schools, school district officers, and county/continuation schools.
Who Qualifies for CalHFA Down Payment Assistance?
There are many requirements to qualify for CalHFA loan and down payment assistance programs. Here are four of them:
- First-Time Home Buyer – according to CalHFA, a first-time home buyer is someone who has not owned their home in the last three years. If you have previously owned a home, but sold it at least three years ago, you qualify as a first-time home buyer.
- Occupy As Primary Residence – CalHFA requires the borrower(s) to occupy the home for the entire term of the loan, until you either sell or refinance out of a CalHFA program.
- Low to Moderate Income – Income limits vary by county, program, and household size. They are updated regularly, so check the CalHFA income and sales prices limits page for current numbers. Effective July 18, 2016, the income limit for a four-person household in San Diego is $106,250 for a conventional loan, and $102,450 for an FHA loan. Effective October 5, 2015, the income limit for a four-person household in San Diego is $91,100 for a VA loan. CalHFA does not count total household income. The only income counted is for the borrowers on the loan.
- Property Sales Price Limits – Sales price limits are updated regularly on the CalHFA income and sales prices limits page. Effective October 27, 2015, the sales price limit in San Diego County is $600,000. Certain programs may have lower maximum loan amounts.
CalHFA Down Payment Assistance Programs
These down payment assistance programs provide funds that can go toward buyer closing costs, including the down payment, upfront mortgage insurance premiums, and lender/title/escrow charges. You can also read about buyer closing costs.
MyHome Assistance Program, Combined with ZIP
MyHome is for first time home buyers with good credit. MyHome funds can be used for both the down payment and/or closing costs. MyHome is a deferred, simple-interest loan (silent second) equal to 3% of the sales price or appraised value, whichever is less. The simple interest for the MyHome loan is 2.5%. The maximum Debt-to-Income qualifying ratio for MyHome is 45%.
MyHome can be combined with all CalHFA first mortgage programs, including the CalHFA Zero Interest Program (ZIP). When combined with CalPLUS loans and ZIP, the interest rates are slightly higher, but ZIP may help you buy a home with no money down.
CalPLUS FHA Loan – MyHome and ZIP
When combined with a CalPLUS FHA loan, ZIP is down payment assistance in the form of a deferred-payment junior loan of 3.5% or 4.5% of the first mortgage amount. The interest rate increases with a higher ZIP loan. Check the CalHFA website for current interest rates.
If you combine the MyHome (3%) with ZIP (3.5-4.5%), that’s a full 6.5-7.5% of down payment assistance!
CalPLUS Conventional Loan – MyHome and ZIP
MyHome and ZIP can also be used with the CalPLUS Conventional loan. The Conventional ZIP second loan is a no-interest, silent second loan for 3% or 4% of the first mortgage amount. The interest rate increases with a higher ZIP loan. Check the CalHFA website for current interest rates.
If you combine the MyHome (3-4%) with ZIP (3%), that’s a full 6-7% of down payment assistance!
Example – Combining MyHome and ZIP
Here’s how to buy a home for little money down, using CalPLUS Conventional Loan, with the 4% ZIP and 3% MyHome assistance programs:
Purchase Price $300,000 plus Estimated Closing Costs $8,400 = Total Needed: $308,400
CalPLUS Conventional Loan Amount (95% of purchase price): $285,000
ZIP (4% of first mortgage amount): $11,400
MyHome (3% of purchase price): $9,000
$285,000 + $11,400 + $9,000 = $305,400. Only $3,000 needed to close!
Monthly Payment (principal, 4.5% interest, mortgage insurance): $2,050
Monthly Payment does not include property taxes, homeowner’s insurance, nor HOA fees
ECTP is for eligible teachers, administrators, classified employees, and staff members working in any California K-12 school, district office, or county/continuation school. These deferred-payment junior loans range from $7,500 to $15,000, depending on the area in which the home is being purchased. In contrast to the other programs, which can be used for either closing costs or down payment, the ECTP can only be used toward the down payment. The ECTP can be combined with the ZIP program, or the Cal-EEM + GRANT program, described below. The interest rate is 2.5%.
The CalHFA Energy Efficient Mortgage + Grant (Cal-EEM + GRANT) Loan Program combines an FHA-insured first mortgage loan (Cal-EEM), with an additional EEM Grant. Check the CalHFA website for current interest rates. This Grant is to help pay for energy efficient improvements over and above the maximum allowable FHA EEM loan amount.
The Energy Efficient Mortgage already lets a homebuyer borrow additional funds for energy improvements. The total allowable costs of the improvements that may be eligible for financing as part of the loan is either 5% of the property’s value, not to exceed $8,000, or $4,000, whichever is greater.
The CalHFA EEM Grant is for up to 4% of the first mortgage total loan amount, including Up Front Mortgage Insurance Premium. If a homeowner stays in the home for three years, the 4% grant is completely forgiven, and the homeowner does not have to pay it back.
The Cal-EEM + GRANT program can be combined with the ECTP, described above. Cal-EEM is for purchase transactions only. Refinances are not allowed. This program is not limited to first-time home borrowers. Even if you have owned a home in the past three years, you can qualify for this program. However, at the time of loan closing, you can’t have any other ownership interest in another residential dwelling. You need to occupy the property as your primary residence within 60 days of closing.
Energy Efficient Improvements
Examples of improvements that qualify for funding include:
- New HVAC system
- Fixing or replacing a chimney
- Insulation of attics, crawl spaces, pipes, ducts
- Energy Star sliding glass doors and windows
- Installation of active and passive solar technologies
- New energy-efficient refrigerator and/or dishwasher
A Home Energy Rating System (HERS) report is required. (Read more about Home Energy Assessments.) This HERS report will identify qualifying energy improvements for your property. You can also read about other ways to finance green upgrades.
Example – Cal-EEM + GRANT
$500,000 home purchase price
Maximum financed improvements with EEM: $8,000
4% Grant (based on loan amount, including up front mortgage insurance): approximately $19,800
TOTAL FUNDS AVAILABLE FOR ENERGY IMPROVEMENTS: $27,800
Mortgage Credit Certificate Tax Credit Program – MCC
CalHFA also offers the Mortgage Credit Certificate Tax Credit Program (MCC). This is a federal credit which can reduce potential income tax liability, freeing up money that can go toward a monthly mortgage payment. A portion of annual mortgage interest is converted into a direct dollar-for-dollar tax credit on your individual income tax return.
Effective June 1, 2017, the sales price limits for the MCC Program in San Diego County are $564,353 for a non-targeted area, and $689,764 for a targeted area. The MCC can be layered with all of the CalHFA loan programs described above. When you layer programs, the lower sales price limit applies.
Income limits for the MCC are generally higher than for other programs. Effective July 5, 2017, income limits for San Diego County are $109,080 for 1-2 person households, and $127,260 for 3+ person households.
Effective September 6, 2016, the following fees apply to all new MCC reservations. These fees are payable to eHousingPlus and should be paid with a corporate or cashier’s check. MCC fees may not be financed.
- MCC Administration Fee: $450 when combined with CalHFA first mortgage loans, or $750 when combined with non-CalHFA first mortgage loans.
- MCC Reissuance Fee: $500 for any MCC application which has been refinanced or reissued.
CalHFA Down Payment Assistance – Mortgage Insurance
Any CalHFA loan with less than 20% down payment requires mortgage insurance. For CalHFA programs, Genworth provides the mortgage insurance.
The cost of mortgage insurance varies, based on the type of loan, the down payment amount, and your FICO score. You can see their list of mortgage insurance premiums, effective April 4, 2016.
More Down Payment Assistance
Low- to median-income borrowers may qualify for additional down payment assistance. Some programs can be layered on top of each other, to maximize your benefit.
Use the California Association of REALTORS® Down Payment Resource Tool to check all available programs. Here are links to my articles about some other popular down payment programs:
- San Diego Housing Commission – deferred loans and grants
- Fannie Mae HomePath Ready Buyer Program – grants up to 3% for Fannie Mae owned homes
- Golden State Finance Authority – grants up to 5% for down payment and closing costs
Many lenders are not familiar with these programs, and may not be able to help you. If you need to find a knowledgeable lender, or have any questions about home buying, call or text me at (760) 637-7231. You can also send me a message.
My favorite loan officer is Nick Richardson at JMJ Financial Group in San Diego. JMJ Financial is an approved CalHFA and Golden State Finance Authority lender. He can help you finance or refinance properties in Arizona, California, Colorado, Hawaii, Montana, Oregon, Texas, and Washington state.
The Bottom Line
CalHFA Down Payment Assistance Programs can make home buying possible if you can afford the monthly payments, but need help with closing costs.
If you want to buy with the lowest down payment, the ZIP program may be able to help you buy with little money down. Using the ZIP Program will increase your interest rate, however. If you want to secure the lowest possible interest rate, then you can still use the MyHome program, without the ZIP program, and contribute more funds to closing escrow. Check the CalHFA website for current interest rates.
Homebuyer education is required to participate. This includes a $99 online eHome America course, plus a one-on-one homebuyer counseling session. You can also use CalHFA’s other approved homebuyer education and counseling courses through NeighborWorks America or any HUD approved Housing Counseling Agency.
Good luck, and contact me with any questions.