The state of California is one of the most expensive places to live in the USA. While this is not the case for all of California, most areas in the state continue to be High-Cost, meaning living in these areas costs a lot of money. Of course, the benefit of living in high-cost areas means the ability to move to these places can be very challenging, if not outright impossible. However, that is where California Housing Finance Agency or CalHFA comes in.

The CalHFA is an independent agency of the California Department of Housing and Community Development. Their goal is to help low to moderate income earners become homeowners in California. So CalHFA provides financing and programs by generating revenue through sales of bonds.

CalHFA provides two main services. They provide First Mortgage Programs and Down Payment Assistance Programs to people.

CalHFA First Mortgage Programs

The CALHFA First Mortgage programs are special loan programs that are combined with other forms of assistance to make the process of buying a home easier.

 

Government Loans

CalFHA FHA Loan Program – 

FHA Loan featuring the CalHFA 30 year fixed interest rate.

CalPLUS FHA Loan Program –

FHA Loan with a higher 30 year fixed interest rate but combined with CalHFA Zero Interest Program or ZIP. The CALHFA ZIP is meant for covering closing costs.

>>More: FHA Loans: What is an FHA Cash Out Refinance Home Loan

CALHFA VA Loan Program –

VA Loan featuring the CALHFA 30 year fixed interest rate.

CALHFA USDA Loan Program –

USDA Loan with a higher 30 year fixed interest rate but combined with CalHFA MyHome Assistance Program. The CalHFA MyHome program is meant to assist with coverage of down payment.

Conventional Loans

CalHFA Conventional Loan Program –

A Conventional loan featuring the CalHFA 30 year fixed interest rate.

CalPLUS Conventional Loan Program –

A Conventional loan with a higher 30 year fixed interest rate but combined with CalHFA Zero Interest Program or ZIP.

What is the CalHFA MyHome Assistance Program?

For a lot of people who are buying a house for the first time and new to taking out mortgages, being able to make lump sum payments for down payments is extremely challenging. This is even more difficult for people who are low to moderate income earners. And for them, CalHFA has created assistance loan programs that can act as “junior” or “secondary” loans that work in tandem with the First Mortgage Programs to make the process more feasible.

CalHFA First Time Home Buyer Assistance programs like MyHome Assistance are special programs meant to assist with the down payment or closing costs. The MyHome Assistance program provides financing for 3 to 3.5% of the property’s appraised value. The assistance goes up to a maximum of $11,000. Meaning that the loan covers either the property’s value up to 3.5% or $11,000 – whichever is less. This amount can then be used for the down payment, however, the best part is that the payments for the assistance loan are deferred for 30 years.

The MyHome Assistance program can only be combined with CalHFA First Mortgage programs but not others.

Benefits of CalHFA MyHome Assistance Program

If a person has two active loans they usually have to make double payments towards the loans every month and this would include two different interest rates applicable during the same time. That kind of pressure would make the mortgage process extremely expensive and unaffordable for most people.

However, that is where the CalHFA MyHome Assistance program shines. When a borrower takes out a CalHFA Conventional loan with the CalHFA MyHome Assistance acting as a junior loan, they don’t have to worry about making the repayment of the junior loan. The reason is that the payment for the junior loan in this case is deferred by 30 years. What this means is that the borrower doesn’t have to worry about making the repayment for the loan until the first mortgage has been paid off, the house has been sold, or that the first mortgage is being refinanced. Because of this, the borrower can continue to pay off the first loan with peace of mind and not worry about making payments for two loan programs in the same month.

Homebuyer Education

One of CalHFA’s unique requirements is that the borrower has to complete a First Time Home Buyer education course. This makes complete sense since California Housing Finance Authority has made these programs to especially cater to the needs of first time home buyers and also aims to improve their knowledge about the process and the real estate market. Taking these courses adds a great benefit to the buyer who will come out being more informed about how the housing market works and use the knowledge from the course and apply it immediately when they start looking for their dream home.

The home buying course can be taken either online or in-person classes. For online, the CalHFA only accepts eHome’s Eight Hour Home Buying Education course because other online courses do not involve a follow up one on one session. CalHFA requires there to be at least a single one on one session for the buyer.

While only one type of online education is approved by the CalHFA, there is no such restriction for live classes – whether they are done in person or virtually over a web call. The important thing for the CalHFA is that the buyer is getting a focused education about becoming a homeowner.

How to qualify for MyHome Assistance?

The requirements for CalHFA programs can be divided into two main categories. The requirements for the Borrower and the requirements for the Property.

Requirements for the Borrower

– The credit score required for the borrower is between 660-680
– The borrower should have a Debt to Income ratio no higher than 45%
– CalHFA set guidelines that require the borrower’s income to not exceed the limit, which depends on the county
– CalHFA defines a first time homeowner as someone that has not owned or occupied their own property in the last 3 years. The borrower must meet this definition
– The borrower must complete a homebuyer education course with a minimum of one face to face
counseling

Requirements for the Properties

– The property must be a Single-Family, one-unit residence
– The property must be located within the State of California
– Land trusts and lease holdings do not meet the eligibility
– The property’s size must not exceed 5 acres
– Manufactured house is permitted
– If the borrower is trying to purchase a condominium, it must meet the guidelines of the First Mortgage program

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