Are There Grants or Free Money Available to Help Buy a Home in California?
The short answer is yes — there are programs that provide money you do not have to pay back toward buying a home. But the real answer is more nuanced: eligibility is specific, funds are often limited, and understanding the difference between a grant, a deferred loan, and a forgivable loan matters before you plan around these programs.
What is a down payment assistance grant?
A true grant is money you receive to help with your down payment or closing costs that does not have to be repaid. Grants for homebuyers are typically funded by municipalities, counties, state housing agencies, federal programs like the Federal Home Loan Bank, and nonprofit or charitable organizations. Most target first-time homebuyers with low to moderate incomes.
Some programs require that you stay in the home for a defined period — if you sell or refinance early, a portion may need to be repaid. These are sometimes called soft seconds or forgivable loans rather than true grants.
What is available in California?
- CalHFA MyHome Assistance: A deferred second loan (not a grant, but no monthly payment required) providing up to 3% of the purchase price. Accrues 1% simple interest; due when you sell, refinance, or transfer title.
- Community Seconds programs: Approved subordinate financing from government agencies, nonprofits, or employers that can be combined with a conventional first mortgage up to 105% CLTV — potentially covering the entire down payment.
- Municipal and county programs: Many California cities and counties offer down payment assistance — sometimes as true grants, sometimes as forgivable loans after 5–15 years of occupancy. Availability and funding change frequently.
- Employer assistance programs: Some employers offer down payment assistance as a benefit. These must be established company programs documented through an award letter or legal agreement.
What conventional loan guidelines say about grants
Conventional loans allow down payment assistance from municipalities, quasi-governmental agencies, and charitable organizations. The DPA can be structured as a grant or subordinate loan. Key requirement: the source must be an eligible approved provider under agency guidelines — not a seller-funded gift dressed up as a grant.
Grant, deferred loan, or forgivable loan: how they differ
| Type | Monthly payment | What happens later | Watch for |
|---|---|---|---|
| Grant | None | Nothing to repay if you meet the rules | Occupancy or first-time buyer conditions |
| Deferred second loan | None | Balance due when you sell, refinance, or transfer title | Interest may accrue; less equity at sale |
| Forgivable loan | None | Forgiven in stages over a set occupancy period | Early sale or refinance can trigger repayment |
A worked example (illustrative example, not a quote)
Suppose you buy a $600,000 home and a program provides a deferred second equal to 3% of the price, which is $18,000. If that second accrues 1% simple interest, the way the CalHFA MyHome loan described above does, then selling after 10 years means interest of $18,000 × 1% × 10 = $1,800. The payoff on the second would be $19,800, taken from your sale proceeds. You never made a monthly payment, but the balance reduces what you walk away with.
How to line up assistance before you shop
- Check the basics. Income limits, first-time buyer definition (no ownership interest in a primary residence in the past three years), and the county where the home sits.
- Ask about funding. Some programs reserve funds when you have a contract; others run out. Ask what is available this month, not what the website lists.
- Confirm the pairing. Not every program works with every first mortgage. We check this against the conventional loan you are considering.
- Read the repayment terms. Look for occupancy periods, recapture formulas, and what triggers repayment.
- Get it in writing. Underwriting needs the award letter or legal agreement, and the funds must come from an eligible source rather than from the seller or an agent.
Programs and amounts change often, so ask us for current availability when you are ready to look.
Frequently asked questions
Can the seller or my agent provide the grant?
Not as a grant. Money from the seller, builder, or agent is treated as an interested party contribution and is capped by loan-to-value, as described in our seller concession guide.
I owned a home years ago. Do I still count as a first-time buyer?
Often you do. The common test is whether you held an ownership interest in a primary residence during the past three years, so past owners who have rented since may qualify. Each program defines its own rules, so confirm before you count on it.
What does underwriting need to see?
The program’s award letter or agreement, the terms of any second loan, and proof of where the funds come from. Gaps here are a common cause of last-minute closing delays.
Related guides
- How the CalHFA program works
- Community Seconds loans explained
- Stacking assistance with a conventional first mortgage
- Saving for a down payment and closing costs
Key takeaways
- True grants do not require repayment; forgivable loans are forgiven after a required occupancy period.
- CalHFA MyHome provides up to 3% of the purchase price as a deferred (not forgiven) second loan.
- Community Seconds programs can combine with conventional loans up to 105% CLTV.
- Municipal and county programs vary widely — funding is often limited and first-come, first-served.
- Employer assistance is allowed on conventional loans when it is an established company program.
- Income limits and first-time buyer requirements typically apply to California grant programs.
- A grant needs no repayment, a deferred loan is repaid at sale or refinance, and a forgivable loan is forgiven over time.
- Ask every program about funding status, recapture terms, and loan combinations before you write an offer.
- Underwriting needs the award letter or program agreement in writing, so request it early.
Ready to explore your conventional loan options? Lendia can walk you through what you qualify for and find the right program for your goals.