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FHA Down Payment Assistance Programs in California

What if you could buy a home with an FHA loan and not have to save 3.5% on your own? That’s exactly what Down Payment Assistance (DPA) programs make possible. Here’s how they work.

What Is Down Payment Assistance?

DPA programs provide funds — either as grants or second mortgages — that can cover your required FHA down payment and sometimes closing costs. These programs are funded by state agencies, non-profit organizations, and government-sponsored entities.

For FHA loans, the most common structures are:

  • Forgivable grant: You receive funds and don’t repay them as long as you meet conditions (usually staying in the home)
  • Second mortgage: A subordinate loan with deferred or low monthly payments, repaid when you sell or refinance

CalHFA — California’s State DPA Program

The California Housing Finance Agency (CalHFA) offers the MyHome Assistance Program for FHA borrowers:

  • Provides 3.5% of the purchase price or appraised value (whichever is lower) as a deferred second mortgage
  • No monthly payment on the second mortgage — deferred for the life of the first loan
  • 1% simple interest accrues but is not paid monthly
  • Due when you sell, refinance, or pay off the first loan
  • Up to 105% CLTV allowed when combined with an FHA first mortgage
Income limits apply — borrowers must not exceed CalHFA’s published income limits, which vary by county across California.

National DPA Programs

Multiple national programs are also available:

  • National Homebuyer’s Fund (NHF): Up to 3.5% (forgivable) or up to 5% of the purchase price. The forgivable option requires no repayment. Available on FHA 30-year fixed loans with a minimum first lien LTV of 95%.
  • Other national DPA programs: Similar structure — 3.5% or 5% as a second mortgage applied toward down payment, closing costs, or prepaids.

How DPA Affects Your Rate

DPA programs typically carry a slightly higher interest rate on the first mortgage compared to a standard FHA loan without DPA. The net benefit of DPA often outweighs the rate premium — especially when factoring in how long it would take to save the down payment independently.

Practical Takeaways

  • CalHFA’s MyHome provides 3.5% as a deferred second — no monthly payment
  • National DPA programs offer grants (forgivable) or second mortgages up to 5%
  • Rates may be slightly higher with DPA, but cash-at-close savings are often significant
  • Income limits apply — many California buyers qualify