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Best First-Time Home Buyer Programs in California

California is the land of sun, surf, and expensive real estate. First-time home buyers struggle to enter the market. There are many federal and state programs to help with down payments and closing costs, but you have to know where to look. Find out more.
California is the land of sun, surf, and expensive real estate. First-time home buyers struggle to enter the market. There are many federal and state programs to help with down payments and closing costs, but you have to know where to look. Find out more.

The California housing market is as hot as the state’s famously good weather. Home values rose 3.2% in 2018 and will rise another 7% in 2019. The median price of homes sold was $491,100, and the 20% down payment to get into a house at that price is over $98,000. If you’re a first-time home buyer, those numbers can be very intimidating.

And it’s not just a down payment that you’ll need to save up, closing costs and realtor fees, moving expenses and more should be factored into your budget. First-time home buyers in California will almost have to take advantage of one of the many helpful programs that the state offers to assist them in buying a home.

Californian Programs for First-Time Home Buyers

The California Housing Finance Agency, or CalHFA, offers multiple programs to help first-time home buyers in California. They even expand the definition of “first-time” to those who haven’t owned a home in the past three years, so if you owned one some time ago, you’re still eligible.

Programs include the MyHome Assistance Program which offers help with down payments and closing costs for low to middle-income families, the CalHFA Zero Interest Program, which provides up to 4% of the total loan as a second, no-interest mortgage, and the School Teacher and Employee Assistance Program.

Each of these programs has slightly different eligibility requirements. Most commonly, the property has to be your primary residence, and five acres or smaller. There are income, sales price, and credit score requirements. And you must take a home buyer education course and show a certificate of complication.

Clever’s post about 10 First-Time Home Buyer Assistance Programs to Look Into will help you find more information.

Federal First-Time Home Buyer Programs

The federal government encourages home-ownership to make the American Dream accessible to everybody. Home ownership is also good for the country as a whole. Property taxes are used to improve roads and schools, home-ownership reduces neighborhood crime rates, and appreciation in home values grows personal wealth. The government sponsors several first-time home buyer programs to help first time homebuyer struggling to buy a home realize their dreams.

FHA loans. Banks and lending institutions are often reluctant to lend to people with lower credit scores who don’t have a 20% down payment. So help borrowers overcome this hurdle, the Federal Housing Administration, or FHA, partners with them. With an FHA loan, the government guarantees a portion of a mortgage given to qualified borrowers. If approved, buyers with less-than-stellar credit can own a home with just a 3.75% down payment. Talk to a local bank that participates in the FHA program for more information.

HUD First Time Home Buyer Programs. The Department of Housing and Urban Development, or HUD, runs county-level programs with down payment assistance, grants for closing costs, and more for first time home buyers.

If you are a teacher, firefighter, or police officer, you can get a mortgage through the Good Neighbor Next Door program. The idea being those who help our communities but aren’t compensated highly should be able to buy homes in those communities. If you qualify, you can purchase a discounted home with just a $100 down payment.

HUD encourages community revitalization by selling foreclosed FHA properties which have been on the market longer than six months to low-income families. Your local county website will have information on your area’s programs.

U.S.D.A. Loans. The U.S. Department of Agriculture program offers loans for borrowers in rural areas, not just farmers as long as they meet income requirements. They’ll approve a mortgage with no down payment. You will have to pay PMI or private mortgage insurance, but the U.S.D.A. charges a cheaper rate than the FHA.

VA Loans. Those who served our country should be able to afford a home in it. If you’re a Veteran, the Veterans Administration has a program to help you. You can get a mortgage with no down payment and no mortgage insurance requirements. Specific help is available to Native Americans through the Native American Direct Loan program. They can purchase properties on recognized trust land.

Look up California in The Complete Guide to FHA Loans By State to find what is available to you. Talking to an experienced, local real estate agent will cut down on your research time, as they will know your options.

Private Lender Programs in California for First-Time Home Buyers

Private first-time home buyer loan options in California are available through Fannie Mae and Freddie Mac.

Fannie Mae’s mortgage product for first-time home buyers is called “HomeReady.” You only need to come up with a 3% down payment. There are no geographic restrictions, but you must have a credit score above 620, and your household’s income must fall within certain guidelines. Freddie Mac’s product, “HomeOne Mortgage,” also will approve qualified borrowers who only have 3% for a down payment. Both products will require you to purchase PMI, depending on the amount of your down payment.

If applying for a mortgage scares you, check out our list of 7 Easiest Mortgage Lenders for First-Time Home Buyers. And make sure to get pre-approved before house hunting, it makes the process go much faster.

Home Buyer Rebates and Other Cost Savings in California

Home buyer rebates are another way to save money, along with using a flat fee or discount realtor and negotiating commissions. A top-rated, local real estate agent can guide you when trying to decide on financing options and how they’ll impact your future mortgage payment.

A Clever Partner Agent does all this for just a flat fee or discount. Agents can also help you save money through negotiations and knowing how to time the market. For more information, read about How to Get a Home Buyer Rebate.

There’s more assistance available for first-time home buyers than you might have thought. Reach out to Clever Real Estate today to be connected with a Partner Agent who can help you eventually move into your dream home.


Jamie Ayers

Jamie is the Director of Content at Clever Real Estate, the free online service that connects you with top real estate agents and helps you save thousands on commission. In the past, Jamie has managed columns for clients in a variety of leading business publications, including Forbes, Inc., CEO World, Entrepreneur, and more. At Clever, Jamie's primary goal is to provide home sellers, buyers, and investors with the information they need to successfully navigate the ins and outs of the real estate industry.

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