Hi there! If you’re feeling overwhelmed by the complexities of buying your first home in California, you’re not alone. There are so many programs out there, and figuring out which one fits your needs can feel like a full-time job. That’s where the CalHFA FHA Loan comes in—a friendly, accessible option designed specifically to make the dream of homeownership a reality for first-time buyers in California.

What is the CalHFA FHA Loan?

The California Housing Finance Agency (CalHFA) partners with the Federal Housing Administration (FHA) to offer the CalHFA FHA Loan. This program combines the low down payment and flexible credit requirements of an FHA loan with additional benefits like down payment and closing cost assistance provided by CalHFA.

Key Benefits of the CalHFA FHA Loan

• Low Down Payment: As low as 3.5% of the home’s purchase price.
• Down Payment Assistance: Combine this loan with programs like the MyHome Assistance Program or ZIP (Zero Interest Program) to cover your down payment and/or closing costs.
• Competitive Interest Rates: Rates are often lower than what you’d find on traditional FHA loans.
• Support for First-Time Buyers: CalHFA provides educational resources, including a required homebuyer education course, to help you prepare for homeownership.
• Forgivable Assistance Options: Some assistance programs can be deferred or forgiven after a set period.

Who’s Eligible for the CalHFA FHA Loan?

• First-Time Buyer Status: Defined as not owning a home in the past three years.
• Primary Residence: The property must be your primary residence—no second homes or investments.
• Income Limits: Your household income must fall within CalHFA’s limits, which vary by county. For example, in Los Angeles County, the limit is $180,000 (2024).
• Credit Score: Minimum of 660 for most borrowers. Some programs combined with the loan may have stricter requirements.
• Debt-to-Income (DTI) Ratio: DTI cannot exceed 45%, including the cost of mortgage insurance.
• Homebuyer Education: Complete a free online or in-person course approved by CalHFA.

How to Apply for the CalHFA FHA Loan

1. Find an Approved Lender: CalHFA doesn’t lend directly, so you’ll need to work with an approved lender who understands the program.
2. Prequalify: Your lender will review your income, credit, and debt to see if you qualify.
3. Complete Homebuyer Education: This is a requirement before closing your loan. You can find options here.
4. Pair with Assistance Programs: Ask your lender about pairing the FHA loan with other CalHFA assistance programs.
5. Submit Your Application: Work closely with your lender to provide all necessary documents, including proof of income, credit history, and property details.

Pros and Cons of the CalHFA FHA Loan

Pros

• Affordable entry point with low down payment.
• Access to additional assistance for closing costs and down payments.
• Competitive interest rates designed for affordability.
• Support and education for first-time buyers.

Cons

• Income and credit restrictions may limit eligibility.
• Additional fees, such as upfront and monthly mortgage insurance premiums (MIP), can increase costs.
• Homebuyer education course is mandatory.
• Must work with a CalHFA-approved lender, which could limit choices.

Where is This Program Available?

The CalHFA FHA Loan is available statewide in California, making it accessible to all first-time home buyers who meet the eligibility requirements.

Sources

• California Housing Finance Agency – CalHFA FHA Loan
• HUD FHA Loan Overview

Category: California

Subcategory: Statewide