California Down Payment Assistance Programs: Where the Money Comes From and How They Work
What California down payment programs actually do
California down payment assistance comes from three separate sources: CalHFA (California Housing Finance Agency), local housing authorities in your county, and nonprofit lenders. Each one works differently—some give you a second mortgage you repay, some give you a grant you keep, and some let you borrow against your future equity. None of them are federal programs you apply for online; you apply through a lender or directly to the program itself, and approval takes weeks, not days.
The amount you can receive varies sharply by program and by your income. Some programs cap assistance at $15,000; others go as high as $80,000 or more. Your county matters: a program that exists in Alameda County may not exist in Kern County. Before you start, you need to know which programs your county actually runs and which lenders in your area are set up to deliver them.
Key Takeaways
- CalHFA's programs are the most widely available across California, but you must work with a lender approved by CalHFA to use them—you cannot apply directly.
- Down payment assistance usually comes as a second mortgage (which you repay over time) or a grant (which you keep), and the type changes what you owe and what your monthly payment will be.
- Your county housing authority may run its own program separate from CalHFA, so checking both is necessary to see all your options.
- Income limits exist for most programs, and they are based on area median income for your county, not a statewide number.
- You must have a purchase contract signed before you can apply, so these programs do not help you save for a down payment—they help you close a deal you have already made an offer on.
CalHFA programs: the statewide backbone
CalHFA runs the California Down Payment Assistance Program (CDAP) and the California Homebuyer's Downpayment Assistance Program (CHDAP). CDAP gives you a second mortgage—money you borrow and repay—while CHDAP gives you a grant or a forgivable loan depending on your income. Both programs require you to work with a CalHFA-approved lender; you cannot go to any bank and ask for CalHFA money.
To find a CalHFA-approved lender, visit the CalHFA website and use their lender search tool. Call the lender directly and ask whether they offer CDAP or CHDAP. The lender will handle the paperwork and submit your application to CalHFA on your behalf. You will need a signed purchase contract, proof of income (usually your last two pay stubs and last two years of tax returns), a credit report, and proof of homebuyer education completion. Most lenders require you to take a homebuyer education course before they will even start the application—some offer it online and it takes a few hours.
Income limits for CalHFA programs depend on your county and household size. A single person in San Francisco County has a different limit than a single person in Tulare County. CalHFA publishes these limits on their website by county. If your income is above the limit, you do not may have access to for that program, though you may may have access to for a different one.
County and local housing authority programs
Many California counties run their own down payment assistance programs through their housing authority or redevelopment agency. These programs often have different income limits, different assistance amounts, and different rules than CalHFA. Some are grant-based; some are second mortgages. Some require you to work with a specific lender; others let you bring the funds to any lender.
To find your county's program, search "[Your County Name] housing authority down payment assistance" or call your county's housing authority directly. Ask specifically whether they have a program separate from CalHFA. If they do, ask what the income limit is, what the maximum assistance is, and whether you can use it alongside CalHFA or whether you have to choose one or the other. Some counties let you stack programs; others do not.
County programs often move slower than CalHFA because they have smaller staff and smaller budgets. Some run out of money partway through the year and reopen the next fiscal year. Before you commit to using a county program, ask whether funds are currently available and how long approval typically takes.
Nonprofit lenders and community development financial institutions
Organizations like Habitat for Humanity, self-help housing nonprofits, and community development financial institutions (CDFIs) sometimes offer down payment assistance in specific California regions. These programs are usually smaller than CalHFA or county programs, but they may have more flexible income limits or different underwriting rules.
To find nonprofits in your area, search "[Your City or County] nonprofit down payment assistance" or call your local housing authority and ask for referrals. Many nonprofits partner with specific lenders, so you may need to work with their recommended lender to use their funds. Ask whether the nonprofit's assistance is a grant, a second mortgage, or a forgivable loan—the structure changes what you owe.
How second mortgages and grants change your monthly payment
If the program gives you a second mortgage, you receive the down payment money but you owe it back. The lender will calculate a monthly payment based on the loan amount, the interest rate (which varies by program), and the term (usually 10 to 30 years). This payment gets added to your first mortgage payment, property taxes, insurance, and HOA fees—it all counts toward your debt-to-income ratio, which affects whether you can afford the house and what interest rate you get on your first mortgage.
If the program gives you a grant, you receive the money and do not repay it. Your monthly payment is lower because you only owe the first mortgage. Some programs offer a forgivable loan, which is a loan that disappears (is forgiven) if you stay in the house for a set number of years—usually 5 to 10. If you sell or refinance before the forgiveness period ends, you have to repay the loan.
Before you choose a program, ask the lender to show you the monthly payment difference between a second mortgage and a grant. The difference can be $200 to $400 per month, which changes whether you can afford the house.
Income limits, credit scores, and other requirements
Most California down payment programs have an income limit based on area median income (AMI) for your county. A program might say "80% AMI" or "120% AMI." This means your household income cannot exceed 80% or 120% of what the median household in your county earns. The median income is different for each county and changes every year, so a program that accepted your income last year might not this year.
Credit score requirements vary by program. CalHFA programs typically require a score of 620 or higher, though some programs ask for 640 or 660. If your score is below the minimum, you will not may have access to. Some nonprofits have lower minimums or offer credit counseling to help you raise your score before you apply.
You will also need to show that you can afford the house. Lenders calculate your debt-to-income ratio by adding up all your monthly debts (car loans, credit cards, student loans, the new mortgage, property taxes, insurance, HOA fees, and the down payment assistance payment if it is a second mortgage) and dividing by your gross monthly income. Most programs require your ratio to be 50% or lower, though some allow up to 55%.
The application timeline and what to expect
The process starts when you have a signed purchase contract. You cannot apply for down payment assistance before you make an offer; the program needs to know the purchase price and the property address. Once you have a contract, you have roughly 21 to 45 days (depending on your contract terms) to get a loan approval and close on the house.
Applying for down payment assistance adds time to this timeline. Most programs take 2 to 4 weeks to approve your application after you submit everything. If CalHFA or your county program is slow, you may close on your first mortgage before the down payment assistance is approved—in that case, the lender will fund the down payment assistance after closing, and you will get a check or a wire transfer to reimburse yourself or pay off a short-term bridge loan.
To move faster, complete your homebuyer education course before you make an offer. Have your financial documents (pay stubs, tax returns, bank statements) ready to go. Tell your real estate agent that you are planning to use down payment assistance so they can build extra time into the contract. Call the lender as soon as you have a signed contract and ask them to start the application immediately.
Frequently Asked Questions
Can I use down payment assistance if I am a first-time homebuyer?
Most programs require you to be a first-time homebuyer, which means you have not owned a home in the past 3 years. Some programs have exceptions for single parents, displaced homemakers, or people buying in rural areas. Ask the lender whether your situation qualifies.
What if I do not have enough saved for closing costs?
Down payment assistance programs cover the down payment, not closing costs. Some programs allow the seller to pay a portion of your closing costs, or you can ask the lender about a closing cost assistance program—these are separate from down payment programs and have their own rules.
Can I use down payment assistance to buy a second home or investment property?
No. These programs are for primary residences only—the house you will live in as your main home. Investment properties and vacation homes do not may have access to.
What happens to my down payment assistance if I refinance?
If your assistance is a second mortgage, it stays on the property and you will owe it when you refinance. If it is a forgivable loan, refinancing usually triggers repayment unless the program specifically allows refinancing without penalty. Ask the program before you refinance.
Do I have to use a specific lender to get down payment assistance?
For CalHFA programs, yes—you must use a CalHFA-approved lender. For county programs, it depends; some require a specific lender and some do not. For nonprofit programs, most have a preferred lender but some let you bring the funds to any lender. Ask before you start the process.