Hey there! If you’re dreaming about buying your first home in California but feel overwhelmed by the process, I’ve got some great news for you. Let me introduce you to the CalHFA USDA Loan Program—a fantastic option for first-time home buyers who are looking to purchase a home in a rural area. This program is designed to make homeownership more affordable and accessible, especially for those who might not have a hefty down payment saved up. Let’s break it down together!

What Is the CalHFA USDA Loan Program?

The CalHFA USDA Loan Program is a partnership between the California Housing Finance Agency (CalHFA) and the United States Department of Agriculture (USDA). It combines the benefits of USDA’s zero-down-payment loan with additional features from CalHFA to help low-to-moderate income buyers achieve their homeownership dreams.

This program focuses on rural areas, which doesn’t necessarily mean farmland—it could include smaller towns and suburban communities just outside city limits. Plus, CalHFA adds a layer of support by offering optional down payment assistance programs to help reduce the upfront costs.

Benefits of the CalHFA USDA Loan Program

• Zero Down Payment: The USDA portion of the loan covers 100% of the purchase price, so no down payment is needed.
• Low Interest Rates: CalHFA negotiates competitive fixed-rate interest terms for borrowers.
• Flexible Credit Requirements: While good credit is always helpful, this program accommodates a range of credit scores.
• Additional Assistance Options: You can combine the USDA loan with CalHFA’s other programs like MyHome Assistance for extra help with closing costs or down payments.
• No Private Mortgage Insurance (PMI): USDA loans have no PMI, though they do have a smaller annual fee compared to conventional loans.

Eligibility Criteria

To qualify, you’ll need to meet both USDA and CalHFA requirements:

• Property Location: The home must be in a USDA-designated rural area (use the USDA property eligibility tool to confirm).
• First-Time Buyer Requirement: CalHFA requires borrowers to be first-time home buyers, which means you haven’t owned a home in the last three years.
• Income Limits: Household income must not exceed the USDA and CalHFA income limits for your county.
• Credit Score: A minimum credit score of 660 is usually required.
• Occupancy: The property must be your primary residence—no vacation homes or rentals allowed.

How to Apply

1. Check Your Eligibility: Use the USDA’s property lookup tool and CalHFA’s income limits chart.
2. Find a Lender: Work with a CalHFA-approved lender who can guide you through the loan and any assistance programs.
3. Get Pre-Approved: Submit your financial details and credit information to see how much you qualify for.
4. Choose Your Home: Work with a real estate agent to find a USDA-eligible home.
5. Complete the Loan Process: Your lender will finalize the paperwork and coordinate with CalHFA.

Pros and Cons of the CalHFA USDA Loan

Pros:

• Zero down payment makes it easier to buy without huge savings.
• Affordable fixed interest rates.
• Additional down payment and closing cost assistance available.
• Expands access to homeownership in rural and suburban areas.

Cons:

• Limited to USDA-designated rural areas.
• Income and property eligibility restrictions can limit options.
• Requires a credit score of 660 or higher, which may exclude some buyers.

Where Is the Program Available?

This program is available statewide in California, but the property must be located in a USDA-designated rural area. Use the USDA Property Eligibility Tool to check locations.

Ready to Get Started?

If you’re considering the CalHFA USDA Loan Program, don’t wait to explore your options! Reach out to a CalHFA-approved lender, and they’ll walk you through the steps. Homeownership in California is closer than you think, even if your dream home is tucked away in a charming rural town. ?

Sources

• CalHFA USDA Loan Program
• USDA Property Eligibility Tool