About CalHFA Loans
CalHFA Loans* are designed to provide financing assistance and sometimes down payment assistance to people with lower incomes. This program is for mortgage loans that are insured or guaranteed by FHA, VA, or USDA and features a 30-year term with a low, fixed interest rate.*
What is a CalHFA Loan*?
CalHFA (California Housing Finance Agency) provides loans to California homebuyers through private lenders. CalHFA loans* are not provided directly to borrowers. Instead, they are provided through approved lenders. Conventional CalHFA loans* are insured through private mortgage insurance. They are also available for home mortgages that are government insured, such as FHA and VA loans.
Interest rates for CalHFA loans* are typically low and fixed, although the exact rate is based on a number of factors, including the borrower’s financial circumstances, lender fees, market conditions, and more. However, the rate also depends on the type of loan the borrower is taking out (FHA, VA, USDA, etc.) and the lender that the borrower is working with. For a more accurate number, borrowers should speak with a CalHFA loan* officer.
Although traditional loans are typically available in a range of term periods (the most common being 15 and 30-year terms), CalHFA loans* are only available at 30-year fixed-rate loan terms.
In addition to the conventional CalHFA loans*, government-insured CalHFA loans* are also available. These include the CalHFA FHA loan program and the CalHFA VA loan program. These programs allow borrowers who take out FHA or VA loans to potentially qualify for the lower fixed interest rates of a CalFHA loan through their lender.
CalHFA provides assistance to first-time homebuyers (anyone who has never been a homeowner before) in the form of several programs, including down payment programs such as MyHome, MCC (Mortgage Credit Certificate Tax Credit Program), the Community Stabilization Home Loan Program, and School Teacher and Employee Assistance Program. Borrowers who haven’t owned a home for over three years may qualify as first-time homebuyers as well.
Eligibility Requirements for CalHFA Loans*
To qualify for a CalHFA loan*, borrowers must meet a number of eligibility requirements that include personal financial requirements, property requirements, and homebuyer education requirements.
To qualify for a CalHFA loan*, borrowers typically must have a minimum credit score of 640.
CalHFA loans* are only available for borrowers whose income falls below a specified level based on where they live. These CalHFA income limits vary from city to city throughout California.
There are several home occupation requirements that homebuyers must meet to be eligible for a CalHFA loan*.
- The home’s sales price can’t exceed the CalHFA sales price limit of $705,000.
- The home must be a single-family, one-unit residence and the property can’t be more than five acres in size. Condominiums may be eligible as long as they meet the first mortgage guidelines. Guesthouses, in-law quarters, and granny units may also be eligible.
- The home being purchased must be the primary residence of the buyer.
Homebuyer education and counseling are required for all first-time homebuyers applying for the CalHFA loan*. However, only one first-time homebuyer is required to take the homebuyer education and counseling course on a single CalHFA loan*. There are two ways borrowers can take the course. If they choose to do so online, they will need to take the 8-hour eHome Homebuyer Education and Counseling course, which costs $99. This is the only course accepted by CalHFA. Borrowers can also take the course in person through any HUD-approved Housing Counseling Agency or through NeighborWorks America.
The best way for a borrower to find out whether they meet the eligibility requirements of the CalHFA is to speak to a consultant today.
Other FAQ’s Relating to CalHFA Mortgages
Further information about CalHFA is discussed through the following frequently asked questions:
The turnaround time for CalHFA loans is relatively quick due to the straightforward paperwork, their dedicated customer service, and their quick processing. Compliance reviews only take three to four days to complete, and the CalHFA loans themselves are typically closed by preferred lenders within a 30 to 45 day period.
The Community Stabilization Home Loan Program provides assistance to first-time homebuyers buying vacant homes located in certain parts of the state. These homes must be owned by financial institutions participating in the program.
As long as the borrower meets certain eligibility requirements, they will be able to subordinate their existing CalHFA junior loans. This means the borrower will be able to refinance their existing first mortgage without having to pay off their existing CalHFA junior loan. The new first loan must lower the existing mortgage payment or replace the existing first loan with a more stable option (such as a lower fixed vs. variable interest rate).
CalHFA does provide down payment assistance in the form of several options known as subordinate loans or “silent seconds.” These loans are deferred so that the borrower does not have to make payments on their down payment assistance until they sell their home, pay it off in full, or refinance it, thereby keeping their monthly mortgage payments affordable. The down payment assistance programs offered by CalHFA include the MyHome Assistance Program, the School Teacher and Employee Assistance Program, and the MCC.
CalHFA My Home
The MyHome Assistance Program provides a loan of up to 3.5 percent of the lesser of the purchase price or appraised value of the home. This loan is meant to be used for the down payment or closing costs and must be combined with the CalHFA first mortgage loan. Only first-time homebuyers are eligible. Borrowers must meet other eligibility requirements as well.
CalHFA School Teacher And Employee Assistance Program
The School Teacher and Employee Assistance Program provides junior loans of upwards of 4 percent of the home’s price. It can only be used towards the down payment or closing costs. It must be combined with an eligible CalHFA first mortgage loan. Only first-time homebuyers who are teachers, staff members, school district employees, or administrators of K-12 public schools in California are eligible. Borrowers must meet other eligibility requirements as well.
MCC (Mortgage Credit Certificate Tax Credit Program)
The MCC is a federal credit program that can help reduce the borrower’s federal income tax liability, thereby creating more net spendable income that can be used towards mortgage payments. Borrowers could also potentially convert part of their annual mortgage interest into a dollar-for-dollar tax credit on their income tax returns. Borrowers must be first-time homebuyers and must meet several other eligibility requirements as well.
For loan examples and more information visit our disclosure page at https://uslendingcompany.com/disclosures/
