Thinking about buying your first home? From choosing the right mortgage loan to affording your down payment, becoming a homeowner can be a long and confusing process. Thankfully, there are a number of first time home buyer programs you can use to make getting an affordable loan a little easier.
First time home buyer programs vary by state. Let’s take a look at a few state-specific programs you can take advantage of in the Golden State, as well as a few federal loan programs for new buyers.
Best First Time Home Buyer Programs in California:
- MyHome Assistance Program
- CalHFA Zero Interest Program
Best National First Time Home Buyer Programs:
- Best First Time Home Buyer Programs in California:
- Best National First Time Home Buyer Programs:
- First Time Home Buyer Programs in California
- Best National First Time Home Buyer Programs
- Buying Your First Home in the Golden State
- Frequently Asked Questions
First Time Home Buyer Programs in California
If you haven’t owned a home in the last 3 years, the state government of California considers you to be a first time homeowner. Let’s take a look at the first time home buyer programs in California available to you if you’re investing in your first property.
1. MyHome Assistance Program
The California Housing Finance Agency (CalHFA) offers down payment assistance through its MyHome Assistance program. MyHome Assistance can help you secure a loan equal to 3.5% of your home’s purchase price or $10,000 (whichever number is lower) to help you pay for closing costs or your down payment. Your MyHome Assistance comes in the form of a subordinated loan, which means that you don’t need to start paying it back until you refinance your home, sell it or make your final loan payment.
- You must be a first time home buyer as defined by the state of California.
- You must be a resident of California, and the home you’re buying must be located in California.
- You must occupy the property you’re purchasing as a primary residence.
- You must meet income limits set by CalHFA. These income limits vary by county — you can see if you qualify here.
- Your home’s purchase price must be within CalHFA’s limits, which vary by county. You can view purchase price limits here.
- Your home must be a single-family unit. The property you’re purchasing can be a traditional home, manufactured home or condominium. Your property cannot have more than 5 acres of land included on the sale.
- You must complete an 8-hour home buyer’s education course and receive a certificate verifying that you’ve finished all the course material.
2. CalHFA Zero Interest Program
The CalHFA Zero Interest Program can help you purchase a home with lower closing cost requirements. You can qualify for the CalHFA Zero Interest Program when you take a CalPLUS conventional mortgage loan or a CalPLUS FHA loan.
Though these mortgage loans have a slightly higher APR than comparable conventional and FHA loans, you can claim up to 3% of your home’s purchase price to help cover closing costs. CalHFA offers this assistance in the form of a no-interest second mortgage. This loan doesn’t need to be paid back until you sell your home, refinance or default on your mortgage.
- You must buy your home using a CalPLUS conventional or FHA loan.
- You must meet CalHFA income limitations.
- Your property’s purchase price must be within CalHFA guidelines. Your property must also meet all of the above requirements for the MyHome Assistance program.
- You must complete an 8-hour home buyer education course.
- You must agree to pay your loan back in-full when you no longer own your home.
Best National First Time Home Buyer Programs
Bank statement-only loans are a good place to start for the self-employed or young professionals who own their own businesses.
Best for Bank Statement Loans: Angel Oak Mortgage Solutions
Angel Oak Mortgage Solutions is a full-service mortgage lender offering traditional and portfolio Non-QM mortgage loans. Angel Oak is licensed in 45 states and offers competitive rates and quick closing times.
- Available for purchase, cash-out or rate-term refinance
- Primary, second home, or investment properties
- Single family, townhomes, or condos
- Loan amounts up to $3.5 million
- No tax return options for self-employed borrowers and real estate investors
- 1099 income options available
- Government loan products available (FHA, USDA, VA)
- Competitive rates on conventional purchase and refinance
- Flexible down payment options
- Non-warrantable condos allowed
In addition to first time home buyer programs in California, you can also use a government-backed loan to buy a home. Government-backed loan programs have insurance from different branches of the federal government. This means that if you default on a government-backed loan and stop paying your bills, the government branch backing your loan will reimburse the mortgage lender.
This makes government-backed loans less risky than other types of mortgage loans, which means that lenders can extend them to applicants with more debt and poorer credit. However, government-backed mortgage loans also have stricter requirements when it comes to which properties you can buy.
There are 3 types of government-backed mortgage loans: FHA loans, VA loans and USDA loans. Let’s take a look at the requirements for each loan.
FHA loans have insurance from the Federal Housing Administration. FHA loans were introduced to help buyers with poorer credit or more debt buy a home. With an FHA loan, you may qualify for a loan with a credit score as low as 580 points and a down payment of just 3.5% of your loan value. If you have at least 10% to put down on your home purchase, you may also qualify with a credit score as low as 500 points.
To qualify for an FHA loan, you must also meet the following requirements:
- You must intend to occupy the home you’re buying as your primary residence. You cannot use an FHA loan to buy an investment property or second home.
- You must have a solid employment history. Though there are no specific income requirements, you need to have the means to make your monthly payments.
- You need to move into your new home within 60 days of closing on your mortgage.
- Your home must pass an appraisal by an FHA-approved appraiser. Your home must be in livable condition.
FHA loans also have value limitations that vary by county. To learn more about FHA loan maximums in your area, search for your county on the FHA’s mortgage limit page.
Best National FHA Lender: Rocket Mortgage® by Quicken Loans®
Rocket Mortgage® by Quicken Loans® can make getting your first mortgage loan easier. Rocket Mortgage® has streamlined the FHA loan application process. Most buyers can complete their application from their phone and receive a decision instantly. Quicken Loans® is one of the largest mortgage providers in the U.S., offering multiple FHA loan terms and consistently affordable rates. If you’re looking for an easy way to get an FHA loan, start by checking out Rocket Mortgage®.
VA loans are a special type of loan for military veterans, active servicemembers and select surviving spouses. A VA loan can help you buy a home with 0% down and a credit score as low as 620 points with most lenders. VA loans have fewer stipulations than FHA loans. For example, there’s no maximum loan value you can borrow with a VA loan.
Not every servicemember will qualify for a VA loan. To get a VA loan, you must meet at least one of the following criteria:
- Served 181 days of active service during peacetime
- Served 90 consecutive days of active service during wartime
- Served more than 6 years of service with the National Guard or Reserves
- Are the spouse of a servicemember who lost their life in the line of duty or as the result of a service-connected disability
Your property must also receive an appraisal from a VA-approved appraiser to certify that it’s in livable condition. If your home has major damage (like a broken window or a nonfunctional septic system) you or your seller will need to make repairs before you can get your loan and move in.
If you qualify for a VA loan, you’ll also need to get a Certificate of Eligibility (COE). A COE is a document confirming that you meet the service requirements to qualify for a VA loan.
The specific proof you’ll need to submit to receive your COE depends on the type of service you completed. Your mortgage lender may be able to help you get your COE if it offers VA loans.
Best National VA Lender: Veterans United
Veterans United is a mortgage lender specializing in VA loans and refinances. Veterans United employs a full team of former service members for every branch of the military who can give your first-hand advice and assistance when it comes time to get your COE.
Veterans United also offers a comprehensive education center that can help you learn more about how a VA loan works and how you can get your loan. If you’re a veteran or servicemember looking for more personal assistance securing your COE and your loan, Veterans United is an excellent choice.
USDA loans are a type of mortgage loan that can help you buy a home in a rural area with a lower down payment. You can buy a home with 0% down and a credit score as low as 640 points with most lenders.
Unlike VA loans and FHA loans, USDA loans have strict location limits. You can only use a USDA loan to buy a home in a rural or suburban area. You can check and see if your home qualifies by using the USDA’s eligibility map. You must also meet income limits to qualify, which vary depending on your county. You can see if you qualify by clicking on the same link above and entering your household income information on the tab labeled “Income Eligibility.”
Like other types of government-backed mortgages, you must intend to use the home you’re buying as your primary residence to qualify for a USDA loan. Your home must also meet basic livability standards and be up to local health and safety codes at the time of purchase.
Best National USDA Lender: Wells Fargo
With over 1,000 branches in California, Wells Fargo is one of the largest banks in the state — and it also offers a convenient and personalized way to apply for a mortgage loan. You can learn more about current USDA loan rates and the program online through Wells Fargo My FirstHome interactive module. Explore all of your loan options with just a few clicks and begin your application online.
You can also apply for a loan at your local Wells Fargo branch or begin a loan online and finish it in person at a branch. If you’re looking for the convenience of an online mortgage loan but you want the safety of knowing that you can go to a physical branch, Wells Fargo might be the right lender for you.
Buying Your First Home in the Golden State
No matter if you’re looking for the most affordable loan possible or you’re self employed and searching for a mortgage lender that considers nontraditional assets, choosing a mortgage lender should be a personal process. A mortgage can be a 30-year commitment, so it’s important that you choose a lender with loan offerings and customer service that works for you.
Don’t be afraid to take a few weeks to contact mortgage lenders and learn more about the specific services each offers. Considering your options will leave you with the peace of mind that comes with knowing you’ve got the best loan possible.
Frequently Asked Questions
How much should first time buyers save for a down payment?
First time home buyers should save at least 3.5% for a down payment when taking out an FHA loan, but there are other loan products that range from a 0% to a 20% down payment.
How does mortgage pre-approval work?
Pre-approval for mortgages allows buyers to get a letter from the lender stating that they are approved up to a certain amount, ensuring agents and sellers that they can, in fact, afford the home.
Get Ready for Take Off
Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.
You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.