Though it's not as simple as it looks, buying your first house is a worthwhile and realistic objective. Mortgage programs that target first-time buyers make it even more accessible. The federal government and the state of California both provide assistance programs. First-time home buyers overwhelmed by the process may benefit from consulting an expert. As many as three local fee-only financial advisors can be found with the SmartAdvisor matching tool.

Federal Programs for First-Time Home Buyers

First, we'll cover a few federal home buyer programs available to people in all states, and then we'll get into the programs tailored exclusively to Californians. When looking for a mortgage, it's essential to investigate national and form choices.

FHA Loans

As a first-time buyer, consider applying for a Federal Housing Administration mortgage. Many people in the United States can take advantage of these benefits since there are relatively few conditions, and they are all rather simple to fulfill. First, the minimum down payment required to purchase a home is only 3.5 percent of the home's worth.

Compared to the standard 20% down payment on a traditional mortgage, it's easy to see why so many people take advantage of this option. In contrast to conventional loans, FHA loans don't have prepayment penalties if you can pay them off early.

VA Loans

As one might think, a VA loan is designed specifically for active duty military personnel, veterans, their surviving spouses, and any other beneficiaries the Department of Veterans Affairs approves. But the VA needs to provide you with a loan. In its place, it will work with a third-party lender to provide you with loan insurance.

However, a VA financing charge is associated with these loans, and the amount you pay will vary from 1.25 percent to 2.4 percent of the loan amount, depending on your down payment. The absence of a VA loan down payment requirement is its primary selling point since it allows the borrower to finance the total purchase price of a property.

USDA Loans

Unlike conventional mortgages, a USDA loan doesn't need an initial payment. Due to the leniency of the credit requirements, USDA loans are often granted to borrowers with less-than-perfect credit. However, a 10% down payment may be required if your credit score is lower than average. The residence must be in a rural or rural-like location, as defined by the federal government, to qualify for a USDA loan.

Friendly Neighbor Scheme

The Good Neighbor Next Door Program was established by the Department of Housing and Urban Development to assist "revitalization zones" throughout the United States. Instead of offering a traditional mortgage, this initiative will provide first responders, law enforcement officers, firefighters, and educators in grades K-12 with a 50% discount on properties in these areas.

How To Get California Homebuyer Assistance

First, even if you've previously owned a property, you may still be considered a "first-time purchaser." You can't be a homeowner in the past three years. If you can come up with the down payment and closing fees on your own, you may qualify for most CalHFA loans. Your annual household income must be at or below the level set by the county where you want to purchase your home.

A Guide to First-Time Homebuyer Loan Programs in California

Find a loan officer knowledgeable with CalHFA's programs and on the agency's list of "recommended loan officers" if you're interested in applying for one of these programs. Keep in mind that there is a need for more competent loan officers in the market; for example, CalHFA lists just eight loan officers serving the county of Los Angeles.

CalHFA does not offer mortgages. Instead, it forms alliances with banks prepared to provide low-interest loans to those who meet specific criteria. A lender's eligibility to assist with CalHFA loans for purchasers is contingent upon passing an approval procedure and subsequent yearly recertification.

CalHFA Closing Cost and Down Payment Assistance Programs

If you want a conventional loan and the median home price in your area is above $700,000 by the end of 2022, your down payment will need to be at least $140,000. With just a 3% down payment, you'd still need to come up with $21,000. Once you factor in closing fees ranging from 2 percent to 5 percent of the property's purchase price, reaching the peak of Mount Whitney is an easier achievement than purchasing your first home. As a boon, CalHFA provides access to second mortgages to aid with these outlays.