First-Time Homebuyer Assistance Programs in California

Aalto Insights Team
Apr 11, 2023

First-Time Homebuyer Assistance Programs in California: A Comprehensive Guide

The thought of becoming a homeowner for the first time can leave many buyers feeling overwhelmed and intimidated, especially in pricier real estate markets. Figuring out how much you can afford to spend, saving for a down payment, and then coming up with closing costs on top of that can be daunting, especially in places like California, where home prices are among the highest in the country.

Buyers often lose hope and may end their home search due to the stress of the search. From home price sticker shock,  news about high interest rates and mortgage payment estimates, or fear around being set up with the wrong loan program, many buyers quit before they even get to explore all of their available financing options. But, we’re here to help you find all of the resources you need to feel confident in your home search and purchase. 

So, if you are shopping for real estate in California, we have some good news!

There are a number of down payment assistance programs and first-time homebuyer programs designed to help alleviate the financial burden of first-time homeownership, you just need to know where to look and how to qualify. These state-sponsored programs cover a wide range of situations from low-income or bad credit score buyers to community development initiatives.

We’ve outlined them all below so you can make the best decisions in your home buying process.

Types of First-Time Homebuyer Assistance Programs

Below are the 5 common types of assistance programs:

  1. Closing Cost Assistance: Help cover the closing costs associated with buying a home 
  2. Down Payment Assistance: Offer financial support or loans to help with the large sum required for the down payment on a home
  3. Local and City Programs: Many cities and counties in California offer their own programs for homebuyer assistance, which include options for down payment assistance, loans, and deferred-payment loans
  4. Mortgage Loan Assistance: Offer special interest rates or first-time mortgages to buyers 
  5. Mortgage Credit Certificates: Give a federal tax credit to eligible first-time buyers when they purchase their home

Who is considered a first-time homebuyer? 

You are considered a first-time homebuyer in the state of California if you have not purchased and occupied a home within the last three years. 

The Importance of Down Payment, Mortgage Loan, and Closing Cost Assistance Programs

Whether you are buying a condominium or a single family home, the down payment is often the biggest hurdle for first-time homebuyers, as the sum of money required is significant. In California, down payment amounts can easily be over $100k, which is a huge chunk of change for anyone, but especially a first-time buyer!

California Home Buyer Stats from The Mortgage Reports:


Coming up with the money to cover this large upfront cost can be a challenge, especially for first-time buyers and those with low to moderate income. And figuring out how to manage increasing mortgage rates, mortgage insurance, and median income requirements for a lender to approve your mortgage loan can be a headache. 

This is where housing programs like down payment assistance and homebuyer assistance programs come in.

These state-sponsored initiatives are designed to provide eligible buyers with financial resources for down payment and closing cost assistance, making homeownership more accessible to those who might not otherwise be able to afford it. 

Homeownership assistance can also come in a variety of forms including first mortgage programs, income limit programs, home loan offerings, and other zero interest programs. 

Eligibility requirements for these programs usually require more qualifying criteria than conventional loans, such as credit score minimums, mortgage lender requirements, and sales price limitations. Be sure to research your options to find the program that best fits your unique situation.

California Housing Finance Agency: CalHFA

CalHFA offers first-time homebuyers access to state-insured and conventional mortgage loan programs with their special interest rates and fixed-rate loan options. Borrowers are also provided with access to down payment and closing cost assistance through CalHFA. To qualify for this type of assistance buyers and the property being purchased need to meet specific criteria. 

To qualify for these mortgage loans and assistance programs, buyers will typically need to meet the below requirements:

  • First-time homebuyer
  • Complete the homebuyer education course and present a certificate of completion (course is offered through CalHFA, it is an 8 hour in-person or online course that costs $99)
  • Meet CalHFA’s median income limit, based on your specific area
  • Have a minimum credit score of 660-680 (note: this is dependent on which program you choose)
  • Be purchasing a primary residence 
  • Be purchasing a home in California

Generally speaking, these are the property eligibility requirements for CalHFA programs:

  • The home must be zoned for Single Family Occupancy (not for 2-4 units)
  • The home must be a single family residence: Accessory Dwelling Unit (ADUs), guest houses, granny units and in-law quarters may be eligible
  • The home can be a condominium or attached unit in a planned unit development (PUD) (check with your lender for eligible condominiums)
  • Doublewide (not singlewide) manufactured homes are allowed
  • Land trusts and leaseholds aren’t eligible

Specific requirements for each loan and assistance program type can be found on the CalHFA site.

The Dream For All: Shared Appreciation Loan

**4/10/2023 Update: The Cal Dream For All program is now paused - due to the popularity of this program, all of the $300m in the fund has been fully allocated.**

The Dream For All Shared Appreciation Loan is a new down payment assistance program for first-time homebuyers that provides financial help for up to 20% of the home’s purchase price. It is offered in partnership with the Dream For All Conventional first mortgage loan for down payments and/or closing costs. This is a great offering for buyers who want to come up with a larger down payment but cannot do it on their own. 

With this program, the buyer has to repay the original down payment loan plus the shared appreciation of the value of the home, but only when they sell the home.

If a buyer gets 20% down payment assistance, the California housing authority will be able to collect 20% of the increased value of your home when you sell it or refinance.

To qualify for this program, buyers must:

  • meet the minimum credit score requirements
  • meet the county income limits
  • complete the homebuyer education course prior to closing on the home

Some great resources on the specifics of this new program and offering can be found on the CalHFA Dream for All website. We also recommend asking your lender about the eligibility requirements and criteria for this program so that you can find the perfect option for your unique situation.

Other Available California Homebuyer Assistance Programs 

CalHFA FHA loan

This loan program is offered through CalHFA and guaranteed by the FHA (Federal Housing Administration). It offers a fixed-rate 30-year mortgage loan that can be used for single family or condominium first-time purchases.

CalPLUS FHA loan

The CalPLUS FHA loan is a mortgage assistance option that has a slightly higher interest rate than the standard FHA loan program. This home loan also includes closing cost assistance, called the CalHFA Zero Interest Program or ZIP. It also has a 30-year fixed mortgage loan option.

CalHFA VA loan

The CalHFA VA Loan is offered to eligible veterans and active-duty service members. This VA-insured first-time mortgage has a 30-year fixed-rate loan option and can be used to purchase a condominium or a single-family home. Other property types may also be eligible, so be sure to check your eligibility on the VA site.

CalHFA USDA loan

The CalHFA USDA (U.S. Department of Agriculture) loan is a 30-year fixed-rate mortgage offering, backed by the USDA. This loan also comes with down payment assistance through the MyHome Assistance Program. 

To qualify for this type of loan, the buyer must meet both USDA income limits and the other eligible rural area requirements. More information on the eligibility criteria can be found on the CalHFA and USDA sites.

CalHFA MyHome Assistance Program

MyHome Assistance programs and borrowing limits: 

  • CalHFA Government Loans (FHA): MyHome Assistance offers a deferred-payment mortgage loan of up to 3.5% of the home’s purchase price.
  • CalHFA Conventional Loans: MyHome offers a deferred-payment loan of an amount up to 3% of the home’s purchase price.

These loans are often called ‘second mortgages’ or ‘junior loans’ and are usually deferred-payment mortgage loans. With deferred-payment loans, the buyer pays back the full amount of the loan plus interest, but only when you sell or refinance the home, instead of paying monthly as you would with a conventional loan. 

CalHFA MyHome Assistance Program, qualifying criteria:

  • Be a first-time home buyer
  • Purchase a single-family residence
  • Use the home as their primary residence
  • Complete the homebuyer education counseling
  • Meet the CalHFA income limits

Note, some of these criteria do not apply to employees of: fire departments or schools. More info on the exemptions can be found on the CalHFA website.

Forgivable Equity Builder Loan

A new program for homebuyers in California ,The Forgivable Equity Builder Loan, helps first-time homeowners buy real estate with a loan option of up to 10% of the purchase price. This loan is forgivable after 5 years if you continue to live in the home throughout that timeframe.

This is another great option for buyers who meet the below requirements:

  • First-time home buyer in California
  • Buying a single-family home
  • Live in the home as the primary residence for 5+ years
  • Complete a home buyer education course if borrowing through CalHFA
  • Meet the county income limit requirements

More Resources for Homebuyer Assistance Programs in California

Statewide and regional CA home buying programs

CA home buying programs by city and county:

Specific regions in California, like San Diego and San Jose, have other special programs for buyers that are only offered on a local level. Be sure to check out the options for your specific area to see  if your desired city or county has additional offerings.

If you have any questions or you’re ready to start your home search, Aalto is here to help. We’re dedicated to demystifying the real estate process and providing you with the tools you need to buy or sell your home. Get started on

Aalto, Inc is a real estate broker licensed by the State of California, License #02062727 and abides by Equal Housing Opportunity laws. This article has been prepared solely for information purposes only. The information herein is based on information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy of the information. Aalto disclaims any and all liability relating to this article.

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