Hey there! If you’re dreaming about buying your first home in California but feeling overwhelmed by the upfront costs, the CalPLUS FHA Loan Program might be just the helping hand you need. This program is designed specifically for first-time home buyers and comes with some extra perks to make the process more affordable and accessible. Let’s break it all down.

What is the CalPLUS FHA Loan Program?

The CalPLUS FHA Loan Program is offered by the California Housing Finance Agency (CalHFA). It’s a 30-year fixed-interest FHA-backed mortgage loan designed for low- to moderate-income first-time home buyers. What makes it unique is that it comes bundled with a Zero Interest Program (ZIP), which helps cover closing costs.

Key Features

• Low Down Payment Requirements: As an FHA loan, you can qualify with as little as 3.5% down.
• ZIP for Closing Costs: The program provides a zero-interest loan (deferred payment) for your closing costs. You won’t have to pay it back until you sell, refinance, or pay off the main mortgage.
• Fixed-Rate Mortgage: Peace of mind knowing your interest rate stays the same for the entire 30-year term.
• Accessible for First-Time Buyers: You don’t need perfect credit to qualify, making it a great choice for those new to homeownership.

Eligibility Criteria

To qualify for the CalPLUS FHA Loan Program, you need to meet these requirements:

• First-Time Home Buyer: You can’t have owned a home in the past three years.
• Income Limits: Your income must fall within CalHFA’s established limits, which vary by county.
• Credit Score: A minimum credit score of 660 is required.
• Debt-to-Income Ratio: Must not exceed 45%.
• Homebuyer Education: You’ll need to complete a homebuyer education course to prepare for the responsibilities of owning a home.
• Primary Residence: The property you’re purchasing must be your primary residence.

Benefits of the Program

• Affordable Entry to Homeownership: Lower upfront costs with the ZIP assistance.
• Deferred Payments on ZIP Loan: No immediate repayment needed for closing cost assistance.
• Favorable Loan Terms: The fixed rate offers stability in monthly payments.
• Inclusive for Lower Credit Scores: FHA loans are known for being more lenient than conventional loans.

Potential Drawbacks

• Deferred ZIP Repayment: While ZIP loans don’t require immediate repayment, you’ll owe the amount when you sell, refinance, or pay off your mortgage.
• FHA Mortgage Insurance: You’ll need to pay upfront and annual mortgage insurance premiums, which add to your overall costs.
• Geographic Limitations: Only available in California.

How to Apply

1. Check Eligibility: Review CalHFA’s income limits for your county and ensure you meet the credit and debt-to-income requirements.
2. Find a CalHFA-Approved Lender: You must work with an approved lender who understands the program.
3. Complete a Homebuyer Education Course: This can often be done online or in person and is a required step.
4. Submit Your Application: Your lender will guide you through the application process and provide assistance with the ZIP loan.

Availability

This program is statewide in California.

Sources

• California Housing Finance Agency – CalPLUS FHA Loan Program
• ZIP Loan Details