Eligibility requirements for CalHFA programs and general procedures for first-time homebuyers.

Eligibility Requirements

• Borrower Requirements

In order to qualify for a CalHFA loan, certain requirements must be met. They are:

• Be a first-time homebuyer.
  (CalHFA considers you a first-time homebuyer if you have not owned and occupied your own home during the last 3 years.).
  (This requirement is not necessary if the property is located in a Federally designated "Targeted Area*”)
• Have an annual income within CalHFA’s income limits for the family size and county in which the home is located.
• Purchase a home that is within CalHFA’s sales price limits for the family size and county in which the home is located.
• Live in the home you are purchasing for the entire term of the loan, or until the home is sold or refinanced.
• Meet credit, income and loan requirements of the CalHFA lender and the mortgage insurer.
• Be a citizen or other national of the United States or a qualified alien.
• All borrowers must have completed homebuyer education counseling and received a certificate of completion through an eligible homebuyer counseling organization.
  • CalHFA will accept a homebuyer’s education counseling certificate of completion issued through Fannie Mae or Freddie Mac identified counseling administration agencies, mortgage insurance companies, or HUD-approved homebuyer counselors. CalHFA accepts education completion via online, face-to-face, or phone.
    • Fannie Mae Homebuyer Counseling Counselors/Administrators Search
    • Freddie Mac Homebuyer Counseling Counselors/Administrators Search
    • Genworth Homebuyer Counseling Online Option
    • HUD-approved Housing Counselors
    • U.S. Department of Housing and Urban Development
      451 7th Street, S.W., Washington, DC 20410
      Telephone: (202) 708-1112 

*Targeted Areas: Census tracts in which 70% or more of the families have income which is 80% or less of the statewide median family income.

Homebuyers interested in applying for financing should contact one of CalHFA's approved lenders.

• How to receive CalHFA financing

To find out if you are eligible to receive CalHFA financing you must first work with a CalHFA approved lender. The following is an overview of what to expect when working with a lender.

• Contact a CalHFA-Approved lender to learn more about CalHFA loans and interest rates. To find a lender in your area, search our lender database .

• The lender will determine your eligibility based on program criteria.

• The lender can explain the estimated maximum loan amount and sales price limit for the county in which you are purchasing.

• The lender will also explain the income limit for the county in which you are purchasing.

• Attend a homebuyer education counseling class through an eligible homebuyer education counseling organization

Once the lender has gathered the required materials and qualified you for a loan program, the lender will work with CalHFA to secure your loan.

Homebuyers interested in applying for financing should contact one of CalHFA's approved lenders.

CalHFA does not lend money directly to consumers. CalHFA works through and uses approved private lenders to qualify consumers and to make all mortgage loans. CalHFA purchases closed loans that meet CalHFA's requirements. The fees consumers pay could be different depending on the lender and the program.

• Property Requirements

CalHFA financing is available on a statewide basis; however, not all properties meet CalHFA’s eligibility requirements.

• Eligible properties must be priced at or below the county-by-county limits established by CalHFA for new or existing homes (income and sales price limits are slightly higher in Federally designated Targeted Areas).

• Other property eligibility requirements include:
  • Newly constructed or existing (previously owned) home
  • Single family residence (detached)
  • Five acre maximum
  • An attached residence (a half-plex that is not part of a planned unit development (PUD) or Condominium)
  • A detached unit within a PUD
  • A Condominium or attached unit in a PUD. (Check with lender for eligible condominiums.)

View a list of Affordable Developers by County

General Information for first-time homebuyers

• Ten Tips for Homebuyers

What You Should Know Before Buying a Home

1. Before you start looking for a home, get pre-qualified for a loan. Banks, credit unions and mortgage bankers make home loans; mortgage brokers process them. The lenders will take an application, process the loan documents, and see the loan through to the funding stage.


2. If you have marginal or bad credit, consult your lender. You may be able to qualify for a loan depending on how long ago and what reason(s) caused the bad credit. A lender should be able to advise you on whether your credit history will prevent you from qualifying for a home loan.


3. You will need a down payment. Down payment requirements vary depending on the type of loan. Many down payment assistance programs exist. These programs may loan or grant you the funds necessary for the down payment. Consult with a lender about programs available in your area.


4. You will need funds for closing costs Closing costs are charges for services related to the closing of your real estate transaction. They include, but are not limited to:
   • Escrow fees charged by the company handling the transaction
   • Title policy issuance fees charged by the title insurance company
   • Mortgage insurance fees
   • Fire and homeowners insurance
   • County Recorder fees for recording your deed
   • Loan origination fees
     

     Consult your lender for an actual estimate of these costs, as well as information about loan programs which can assist in financing your closing costs

5. Some loans have "points" and some do not. A point is a loan origination fee equivalent to 1% of the loan amount. Together with the interest rate they constitute the yield on your loan for the lender. Some lenders charge a higher interest rate to compensate for charging no points. It is important to comparison shop lenders to make sure your loan is at a competitive yield.


6. Should you select a mortgage with a fixed rate or an adjustable rate? The answer to this question depends on whether mortgage rates are at a high or a low point when you purchase, and on how long you plan to live in the home. If rates are high, an adjustable rate might be attractive since subsequent rate drops could reduce your monthly payments. Additionally, lenders may offer a low rate during the first few years of an adjustable mortgage to make it appealing to you. If interest rates are low you might want to take a fixed rate to protect yourself against the possibility of rising interest rates.


7. Be aware of the two main types of loan categories.
   • Conventional Loans. Conventional mortgage loans are available with fixed or adjustable interest rates. Some loans may require mortgage insurance.
   • Government Loans. These include Federal Housing Administration (FHA) fixed and adjustable rate mortgage loans, and Veterans Administration (VA) fixed rate mortgage loan
   
   
8. If you are a low or moderate income homebuyer, there are special programs designed to help you. These loans are available through private lenders, as well as local and state housing agencies, like the California Housing Finance Agency (CalHFA). Most lenders specializing in real estate mortgage loans are aware of these types of loan programs.


9. Why might I have to pay mortgage insurance? Mortgage insurance protects the lender from potential loss if you should default on your mortgage loan payment. Generally, conventional loans that require larger down payments do not require mortgage insurance. Mortgage insurance is always required on FHA mortgage loans.


10. Many organizations offer home loan counseling to prospective homebuyers. These organizations provide classes for homebuyers to cover the steps to homeownership. They will cover home selection, realtor services, lenders, loan programs, homeownership responsibilities, saving for a down payment, and other important pieces of information. Many first-time homebuyer programs require homebuyers to attend this type of class to be eligible for selected programs.

• Federal Recapture Tax

CalHFA loans are subject to a Federal recapture tax. Recapture is a Federal income tax that borrowers may have to pay if they sell or transfer their CalHFA-financed home within 9 years.

For additional information refer to CalHFA's "A Guide To Recapture".

For details on how to calculate recapture tax, use IRS form 8828 and its instructions, located on the IRS web site.

Once you determine your eligibility with CalHFA, visit the program descriptions page to find a program that fits your needs. After choosing a program, you should take the information you have gathered to a CalHFA-approved lender to apply for a loan using a CalHFA program. Homebuyers interested in applying for financing should contact one of CalHFA's approved lenders.

CalHFA does not lend money directly to consumers. CalHFA works through and uses approved private lenders to qualify consumers and to make all mortgage loans. CalHFA purchases closed loans that meet CalHFA's requirements. The fees consumers pay could be different depending on the lender and the program.