CalHFA FHA Loan Program: A First-Time Homebuyer’s Best Friend in California

1. Introduction

If you’re a first-time homebuyer in California, the CalHFA FHA loan program could be the key to making your homeownership dreams a reality. With a low down payment, more flexible credit requirements, and down payment assistance options, this program helps buyers overcome financial barriers.

But how does it work? Who qualifies? And what are the benefits? Let’s break it all down so you can see if the CalHFA FHA loan is right for you.

2. What Is the CalHFA FHA Loan?

The California Housing Finance Agency (CalHFA) partners with the Federal Housing Administration (FHA) to offer this loan program.

Key Features:

✔ Low 3.5% down payment
✔ More flexible credit requirements than conventional loans
✔ Fixed-rate mortgage for stable monthly payments
✔ Eligibility for down payment assistance programs

This loan is perfect for first-time homebuyers who meet CalHFA’s income and credit guidelines.

3. Why Choose a CalHFA FHA Loan?

So, why would you choose this loan over other options?

Lower Down Payment – You only need 3.5% down, which is much lower than conventional loans.
Easier Credit Requirements – FHA loans allow lower credit scores than conventional financing.
Fixed Interest Rate – No surprises! Your payments stay consistent over time.
Assistance Options – Eligible borrowers can receive down payment assistance to reduce upfront costs.

If you’re a first-time homebuyer with limited savings, this program can be a game-changer!

4. How Does the CalHFA FHA Loan Work?

The CalHFA FHA loan follows FHA guidelines but comes with some unique features:

✔ Loan Term: 30-year fixed-rate mortgage (no adjustable rates allowed)
✔ Mortgage Insurance: Required upfront and annual mortgage insurance premiums (MIP)
✔ Interest Rates: Set by CalHFA and vary based on market conditions

Even though this is an FHA-backed loan, CalHFA-approved lenders originate and service these loans.

5. Down Payment Assistance with CalHFA FHA

One of the best perks? Down payment assistance!

With the CalHFA MyHome Assistance Program, eligible buyers can get up to 3.5% of the home’s price to help cover the down payment and closing costs.

CalHFA MyHome Assistance Program

✅ Provides up to 3.5% of the purchase price
✅ Can be used for down payment or closing costs
✅ Loan is deferred – meaning no monthly payments until you sell, refinance, or pay off your loan

Unlike the CalPLUS FHA loan, the standard CalHFA FHA loan does NOT offer the ZIP (Zero Interest Program) for closing cost assistance. ZIP is exclusively for CalPLUS FHA borrowers.

6. Who Qualifies for a CalHFA FHA Loan?

To qualify for a CalHFA FHA loan, you must meet these requirements:

✔ First-Time Homebuyer – You can’t have owned a home in the past 3 years.
✔ Minimum Credit Score: 660 (or 680 if using MyHome assistance)
✔ Income Limits: You must earn below the county income limits (varies by location).
✔ Debt-to-Income Ratio (DTI): Cannot exceed 45% (or 43% if using MyHome assistance).

7. Property Eligibility

The home you purchase must also meet specific requirements:

🏠 Location: Must be in California
🏠 Property Type: Single-family home, condo, or approved manufactured home
🏠 Occupancy: You must live in the home (no second homes or investment properties)

8. Loan Limits and Income Restrictions

Loan Limits: Must stay within FHA loan limits for your county
Income Limits: Must fall under CalHFA’s county-specific income caps

💡 Pro Tip: Loan and income limits vary by county, so check with a CalHFA-approved lender to see what applies in your area!

9. How to Apply for a CalHFA FHA Loan

1️⃣ Find a CalHFA-Approved Lender – Only approved lenders can offer this program.
2️⃣ Get Preapproved – Show proof of income, credit score, and financial history.
3️⃣ Take a Homebuyer Education Course – Required for first-time buyers.
4️⃣ Submit Your Loan Application – Your lender will guide you through this process.
5️⃣ Close on Your Home – Once approved, you’ll be on your way to homeownership!

10. Pros and Cons of the CalHFA FHA Loan

✅ Pros:

✔ Low 3.5% down payment
✔ More flexible credit requirements
✔ Fixed interest rate for financial stability
✔ Eligibility for down payment assistance

❌ Cons:

❌ Mortgage insurance costs (FHA requires upfront & annual MIP)
❌ Income limits apply (not everyone qualifies)
❌ Must be a first-time homebuyer

11. CalHFA FHA vs. Other Loan Programs

Feature	CalHFA FHA Loan	CalPLUS FHA Loan	Conventional Loan
Down Payment	3.5%	3.5%	3-20%
Credit Score Requirement	660	660	620-680
Mortgage Insurance	Required	Required	Required if < 20% down
Down Payment Assistance	✅ MyHome (up to 3.5%)	✅ MyHome + ZIP	❌ Not available
Fixed Interest Rate	✅ Yes	✅ Yes	✅ Yes

💡 Biggest Difference? The CalPLUS FHA loan offers ZIP closing cost assistance, while the CalHFA FHA loan does not.

12. Tips for Getting Approved for a CalHFA FHA Loan

🔹 Improve Your Credit Score – Higher scores qualify for better rates.
🔹 Reduce Your Debt – A lower DTI ratio improves approval chances.
🔹 Save for Upfront Costs – Even with assistance, you’ll need funds for appraisal, inspections, and reserves.
🔹 Take the Required Homebuyer Education Course – It’s mandatory!

13. Common Mistakes to Avoid

🚫 Not checking income limits (you might not qualify).
🚫 Ignoring mortgage insurance costs (FHA loans require MIP).
🚫 Applying without getting preapproved (you need a lender first).

14. FAQs About the CalHFA FHA Loan

❓ 1. What is the minimum credit score for a CalHFA FHA loan?
✔ You need at least 660 (680 if using MyHome assistance).

❓ 2. Can I use gift funds for the down payment?
✔ Yes! FHA allows gift funds from family members.

❓ 3. Do I need to be a first-time homebuyer?
✔ Yes, but if you haven’t owned a home in 3 years, you qualify as “first-time.”

❓ 4. Are there specific lenders for this loan?
✔ Yes, you must use a CalHFA-approved lender.

❓ 5. How long does it take to close?
✔ Typically 30-45 days, depending on your lender and financial situation.

If you’re ready to take the next step toward homeownership with the CalHFA FHA loan, we’re here to help!

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📧 Email: hello@newwaymortgage.com
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Don’t wait! Reach out today to get preapproved and start your journey to homeownership. 🚀🏡