As of April 2013 CalHFA is still not accepting first mortgage applications

However, CalFHA is still accepting secondary financing (2nd mortgage) assistance when purchasing a home, please read below for more information.


What is CalHFA? It stands for California Housing Finance Agency. CalHFA loans are funded from the sale of California bonds which makes it different from FHA and conventional loans.

In todays lending environment, CalHFA offers an excellent opportunity for first time homebuyers to obtain a home with little or no downpayment. CalHFA has limitations on what the maximum purchase price and household income allowable, for each county in California. Click here to find out the maximum income allowable in your county, and click here to find out the maximum allowable purchase price in your county. If your income is higher than the figures listed, than you are not eligible for CalHFA second mortgage financing.

CalHFA has a silent (where monthly payments on not required to be made) second mortgage option that can be used to pay for closing costs for your new home, or you can use it as a second mortgage purchase loan, meaning you put less money down. The silent second mortgage, is charged at a low rate, currently 3.25% (changes monthly), but here's the kicker, don't have to make payments on it! You owe the money, but you can pay once you sell the home or refinance. There are specific silent second mortgage types that are tailored for teachers, and there are others that are for anyone who qualifies.

The silent second mortgages do have their own income limitations separate from the first mortgage income limitations, and the loan amount is limited to 3% of the purchase price, so not everyone qualifys, and they don't work for jumbo loans (loans greater than $417k), but nevertheless, it is a program that is worth a look. Click here for the silent second mortgage maximum income limitations.

You can also use the CHDAP second mortgage option together with FHA and conventional first mortgages (check with your lender to see if they allow this.)

If you obtain an FHA first mortgage for 96.5% of the purchase price, and a CHDAP second mortgage, you can add the 2.5% CHDAP second mortgage, which means you need a downpayment of 1%.

CalHFA also accepts other public assistance financing (varies per county), that come from non-CalHFA sources such as churches and other non-profit groups who give funds to their members to use toward buying a home. Put it all together, the 96.5% first mortgage, the 2.5% silent second mortgage, and the public assistance financing, and you can possibly buy a home with a zero downpayment and even have some funds left over to pay for a portion of closing costs.

CalHFA also has a recapture on the their loans. It is a fee that you pay, up to 6.25% of the loan amount, if you violate a list of conditions. Basically, they want to make sure that you are not a "house flipper", and that since there was an income restriction you had to meet to buy the home, they want to make sure that you are making considerably more in income in the following 9 years after taking out the loan. There are a few other caviats to getting hit with a recapture, but rarely does anyone have to pay it. However please click here to read more about the recapture.

CalHFA loans are fully documented income loans, meaning stated income is not permitted. A minimum of a 620 FICO score is also needed, and the you can only use CalHFA loans to purchase a home, not for refinancing.

To learn more about CalHFA products, please feel free to give me a call at 805-276-1942 or click here to let me know your scenario.