BIG changes to CalHFA Down Payment Assistance

There are going to be BIG changes to the CalHFA down payment assistance programs

Big changes to  CalHFA down payment assistance programs was announced on February 3rd.  The bulletin published by CalHFA addressed several changes which become effective on all loans that are reserved and rate locked on or after March 2, 2020

Changes to CalHFA MyHome Assistance Program

In the past, the assistance was calculated purely as a percentage of the sales price regardless of what that amount might be. That will no longer be the case.

CalHFA is instituting a loan amount cap for this program of $10,000 when the program is paired with their Conventional FHA and USDA first mortgages. Here is a summary of what the program will look like after March 2nd.

First Mortgage Maximum My Home Loan Amount
CalHFA Conventional
CalPlus Conventional
Loan amount not to exceed the LESSER of:
$10,000 or 3% of the sales price or appraised value , whichever is less
CalPlus FHA
Loan amount not to exceed the LESSER of:
$10,000 or 3.5% of the sales price or appraised value , whichever is less
CalHFA VA3% of the sales price or appraised value, whichever is less

Those purchasing in higher priced areas are really going to feel the impact of the new limit.
For example: The down payment for a property priced at $550,000 using an FHA loan, is $19,250. That means that you will have to come up with an additional $9250 to complete the down payment.

Pair that with the fact that these loans have higher origination fees and you are almost back to square one and feeling almost no benefit from using the program.

School Teacher and Employee Assistance Program

Say goodbye to this program. That is right, CalHFA has decided that it will no longer offer this assistance as a separate program. This program was very similar to the MyHome program so it is not surprising that it is going away. It always seemed a little redundant to have both programs when they could not be combined.

There are some good news

While it is a bummer that the loan limit will make the MyHome program less helpful for some. there are some good news that were part of the bulletin.

The good news is that the $10,000 limit is NOT going to apply in every situation. As you can see in the chart above, CalHFA VA mortgages are not subject to the limit.

What are the other exceptions to the change to CalHFA MyHome loan limit?

  • School Employees*
  • Fire Department Employees**
  • New construction properties
  • Manufactured housing
  • Those purchasing single family homes with Accessory Dwelling Units

While the programs are becoming less useful for some, there is still value in them particularly if you are purchasing in areas with lower sales prices.
Contact me for a FREE CONSULTATION and find out if these programs are right for you.

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* School Employees are defined as teachers, administrators, school district employees and staff members working for any California public school (Pre/TK – 12) or public-school district, which includes Charter schools and county/continuation schools. Additional documentation required to determine eligibility.
**Fire Department Employees are defined as firefighters, administrators and all other state, federal, local or tribal fire department employees. Additional documentation required to determine eligibility