Buying a home in California can feel like chasing a moving target. Prices rise faster than most people can save, and even high-income earners often struggle to set aside enough for a down payment. Fortunately, California offers dozens of Down Payment Assistance (DPA) programs designed to make homeownership more attainable.
But with so many options, from statewide initiatives like CalHFA to local city and county programs, figuring out which one fits you best can be confusing. Here’s a comprehensive guide to understanding DPA programs and how to choose the right one for your financial situation and homeownership goals.
1. Start With the Basics: What Is Down Payment Assistance?
A down payment assistance program helps homebuyers cover part (or all) of their upfront costs, including the down payment and sometimes closing costs.
DPA typically comes in one of four forms:
- Grants: Free money that never needs to be repaid as long as program conditions are met.
- Forgivable loans: Zero-interest loans that are forgiven after a set period, often 3 to 10 years, if you stay in the home.
- Deferred-payment loans: Zero-interest or low-interest loans that you repay only when you sell, refinance, or pay off your mortgage.
- Repayable second mortgages: Loans with monthly payments alongside your primary mortgage.
Each format serves a slightly different buyer profile, so knowing your long-term plans (how long you’ll stay in the home, how quickly your income will grow, etc.) helps determine which structure is most advantageous.
2. Understand the Statewide Programs First
The California Housing Finance Agency (CalHFA) manages the state’s largest and most widely used DPA options. These programs are designed for first-time buyers (defined as anyone who hasn’t owned a home in the last three years) and work in combination with CalHFA’s fixed-rate mortgages.
CalHFA Dream For All Shared Appreciation Loan
This high-profile program assists up to 20% of the purchase price, in exchange for a proportional share of your home’s appreciation when you sell or refinance.
- Best for: Buyers who need significant upfront help and are comfortable sharing future equity gains.
- Pros: Covers a large portion of the down payment; helps buyers compete in expensive markets.
- Cons: You repay part of the appreciation later, great for entry, but you share future profits.
CalHFA MyHome Assistance Program
Offers up to 3.5% of the home’s purchase price or appraised value (whichever is less) as a deferred-payment junior loan.
- Best for: Moderate-income buyers who can handle monthly payments but need help bridging the gap at closing.
- Pros: Zero interest, no payments until you sell or refinance.
- Cons: Limited to CalHFA loans; assistance amount may not cover all costs in high-priced areas.
CalPLUS Conventional or FHA with ZIP Program
Pair CalHFA’s fixed-rate loans with a Zero Interest Program (ZIP) second mortgage that can cover part of your closing costs.
- Best for: Buyers with stable income who need a “little extra” to close.
- Pros: Easy integration with the primary loan.
- Cons: Slightly higher interest rate on the main mortgage.
Before exploring local programs, see if you qualify for CalHFA assistance. These are among the most accessible and well-funded options statewide.
3. Explore County and City-Specific Programs
California’s local governments and housing authorities often run their own DPA initiatives, especially in high-cost counties like Los Angeles, San Diego, and Alameda. These programs may offer larger assistance amounts or more flexible eligibility criteria than CalHFA.
A few notable examples:
- City of Los Angeles – LIPA (Low Income Purchase Assistance Program): Up to $150,000 for first-time buyers earning below 80% of the area median income (AMI).
- San Diego County – First Time Homebuyer Program: Deferred loan up to 17% of the purchase price; forgiven after 30 years.
- Alameda County – AC Boost: Up to $210,000 as a shared-appreciation loan for moderate-income buyers.
- Sacramento – Homebuyer Assistance Program: Offers loans up to $40,000 with deferred payments.
These local programs tend to open periodically and may require homebuyer education, residency, or employment within the city limits.
If you plan to buy in a specific area, check your local housing authority’s website; you might find an opportunity better suited to your price range than the state programs.
4. Compare Eligibility Rules Carefully
Each program has its own requirements, but the main factors are typically:
- Income limits: Usually capped at 80% to 150% of the area median income (AMI).
- Purchase price limits: To keep homes within affordability standards.
- Credit score minimums: Often around 640–680 for CalHFA loans.
- Occupancy requirements: Must live in the home as your primary residence.
- First-time buyer status: Most DPA programs require it, though a few allow repeat buyers under certain conditions (e.g., disaster victims or veterans).
If you’re above the income cap for one program, you might still qualify for another. Some local initiatives focus on “missing middle” buyers, those who earn too much for low-income aid but too little to buy unaided.
5. Evaluate the Long-Term Trade-Offs
Not all assistance is “free money.” When comparing programs, ask:
- When do I have to repay the assistance?
Some loans are deferred until sale or refinance; others are forgiven gradually over time. - Is interest charged?
Even a low 2% rate over decades can add thousands in total cost. - Do I share future appreciation?
Shared-equity programs help more buyers up front but reduce your eventual profits. - Does it limit refinancing or selling?
Certain assistance loans restrict future refinancing options.
If you expect to move or refinance within a few years, choose a forgivable or grant-based program. If you plan to stay long-term, a shared-appreciation loan may make sense because the upfront benefit outweighs the delayed equity cost.
6. Take the Required Homebuyer Education Course
Nearly every DPA program in California requires a HUD-approved homebuyer education course. These sessions teach budgeting, mortgage terms, insurance, and maintenance responsibilities.
Even if optional, take the class. It will help you understand your loan documents and avoid surprises later.
Completion certificates also make you more attractive to lenders and may speed up approval for multiple programs.
7. Work With a Lender Who Knows DPA Inside and Out
Not all lenders participate in DPA programs, and those that do often specialize in specific ones. A CalHFA-approved lender, for example, can bundle the MyHome or ZIP programs directly into your loan.
Ask potential lenders:
- Which DPA programs do you regularly process?
- How many DPA loans have you closed in the past year?
- Can you layer local and state assistance together?
A knowledgeable loan officer can help you “stack” assistance, combining, say, a city program with CalHFA’s MyHome, to maximize your benefit.
8. Plan and Move Quickly
Most assistance programs have limited funding and operate on a first-come, first-served basis. Application windows can close within weeks once budgets run out.
Get pre-approved early, gather required documents (pay stubs, tax returns, ID, rental history), and monitor program openings through official housing agency websites.
9. Don’t Forget About Closing Costs
While “down payment” is in the name, many programs also cover closing costs, title fees, appraisal, escrow, and prepaid taxes or insurance. These can easily add another 2–4% to your home’s price. A program that covers both down payment and closing costs can save you thousands more than one that covers only the down payment.
The Bottom Line
Choosing the best DPA program in California isn’t about finding “free money”; it’s about finding smart money that fits your goals and timeline. Homebuyerwallet.com acts as a comprehensive platform where information about these programs can be found. It has info, not only about DPA programs but what we term as Community Home Investment Programs (CHIPs).
