How the HomeFirst Down Payment Assistance Program Works
What HomeFirst Does and Who Runs It
HomeFirst is a down payment assistance program run by the state of California through the Department of Housing and Community Development. It gives money directly to homebuyers to cover part or all of a down payment, which means you borrow less from a bank and owe less interest over the life of your loan. The program is designed for first-time homebuyers—people who have not owned a home in the past three years.
HomeFirst works by pairing you with a lender who participates in the program. The lender approves your mortgage first, then HomeFirst provides a second loan (called a silent second) that covers your down payment. You repay this second loan over time, but it does not require monthly payments while you own the home—it comes due when you sell, refinance, or pay off your primary mortgage.
The program is funded through state bonds and federal grants, so the money is real and the program has been operating since the 1990s. However, funding is not unlimited, and the program opens and closes based on available money. You cannot apply unless the program is currently accepting new borrowers in your county.
Key Takeaways
- HomeFirst provides a second loan to cover your down payment, so you borrow less from your primary lender and pay less interest overall.
- You must be a first-time homebuyer (no home ownership in the past three years) and work with a lender who participates in the HomeFirst program.
- The silent second loan does not require monthly payments while you own the home; it is repaid when you sell, refinance, or pay off your main mortgage.
- The program is only open in certain counties and only when funding is available, so you must check with your county housing authority or a participating lender to see if you can currently enroll.
- Income limits and property price limits vary by county and are set based on area median income, so your specific numbers depend on where you want to buy.
Income and Property Price Limits by County
HomeFirst sets a maximum income you can earn and a maximum price the home can cost. Both numbers change every year and differ by county, because they are tied to the median income and home prices in your area. A county with high home prices and high incomes will have higher limits than a county with lower prices.
To find your county's current limits, contact your county housing authority or ask a participating lender. You can also search the California Department of Housing and Community Development website for HomeFirst program details specific to your county. Do not rely on limits from last year or from a neighboring county—they change annually and are not the same everywhere.
If your income or the home price exceeds your county's limit, you will not be able to use HomeFirst. Some counties also have geographic restrictions—the program may only work in certain cities or neighborhoods within the county. Ask your lender whether the specific property you want to buy is in an may be able to access area.
How the Silent Second Loan Works
The silent second is the core of HomeFirst. It is a second mortgage that the lender records against your home, but it does not show up on your credit report and does not affect your debt-to-income ratio when you apply for the main mortgage. This is why it is called "silent"—it exists, but it does not interfere with your primary loan approval.
The silent second covers your down payment, typically between 3 and 20 percent of the home price, depending on your county and the program rules in effect. You do not make monthly payments on this loan while you live in the home. Instead, the loan is repaid in full when you sell the property, refinance your primary mortgage, or pay off your main loan entirely.
The interest rate on the silent second is usually lower than a traditional second mortgage or a personal loan. Some counties offer it at zero percent interest, while others charge a small rate. Ask your lender what the rate will be before you commit. If you refinance your primary mortgage, you will typically have to pay off the silent second at that time, so factor that cost into any refinance decision.
Steps to Use HomeFirst
First, check whether HomeFirst is currently open in your county. Contact your county housing authority, call 211 (a free referral line), or search online for "HomeFirst [your county name]." If the program is closed, ask when it is expected to reopen—some counties reopen it annually or when new funding arrives.
Once you confirm the program is open, find a lender who participates. Not all banks and mortgage companies work with HomeFirst. Your county housing authority can give you a list of participating lenders, or you can ask a lender directly whether they offer HomeFirst. Meet with the lender and provide proof of income, employment, credit history, and savings (if any).
The lender will pre-approve you for a primary mortgage based on your income and credit. At the same time, they will submit your information to HomeFirst to request the down payment assistance loan. HomeFirst will review your application and either approve or deny the silent second. If approved, both loans close at the same time at your title company. You receive the keys and own the home.
Income and Credit Requirements
HomeFirst requires a minimum credit score, though the exact score varies by county and lender. Most participating lenders accept scores in the 620 to 640 range, which is lower than many conventional mortgages. If your score is below 620, ask the lender whether they have flexibility or whether you should wait and rebuild credit first.
Your income must fall within your county's limits and must be verifiable. You will need recent pay stubs, tax returns (usually the past two years), and a letter from your employer confirming your job. If you are self-employed, the requirements are stricter—you may need to provide business tax returns and profit-and-loss statements for two to three years.
You must also show that you have some savings or assets. The amount varies, but most programs want to see that you have skin in the game—even if HomeFirst covers the down payment, you should have money set aside for closing costs and emergencies. Ask your lender what the minimum savings requirement is for your county.
Closing Costs and Other Expenses
HomeFirst covers the down payment, but it does not cover closing costs. Closing costs typically run 2 to 5 percent of the home price and include appraisal fees, title insurance, inspections, attorney fees, and lender fees. You will need to pay these out of pocket or negotiate with the seller to cover them.
Some counties offer companion programs that help with closing costs, so ask your lender or housing authority whether you have other options. You may also be able to ask the seller to pay a portion of closing costs as part of your purchase offer, though this depends on the local market and the seller's willingness.
Budget for a home inspection (usually $300 to $500), a property appraisal (often $400 to $600), and homeowners insurance (varies widely by location and home value). These are separate from closing costs and are your responsibility. Some lenders require you to have homeowners insurance in place before closing.
When HomeFirst Is Not Available or Not the Right Fit
If HomeFirst is closed in your county, you have other options. Some counties run their own down payment assistance programs through the housing authority. Others partner with nonprofits that offer similar help. Call 211 or your county housing authority to learn what programs are currently open where you live.
If your income or the home price exceeds your county's HomeFirst limits, you may still may have access to for a conventional mortgage with a lower down payment (as little as 3 percent) through programs like Fannie Mae or Freddie Mac. These do not provide assistance programs, but they let you borrow more and put down less. You will pay mortgage insurance, which adds to your monthly payment.
If your credit score is too low for HomeFirst, focus on rebuilding credit before you apply. Pay bills on time, pay down existing debt, and dispute any errors on your credit report. Even a 20 to 30 point improvement can open doors to better loan terms and lower interest rates.
Frequently Asked Questions
Can I use HomeFirst if I already have a down payment saved?
Yes. HomeFirst does not require you to have zero savings. If you have some money saved but not enough for the full down payment, HomeFirst can cover the gap. You can use your savings for closing costs or keep it as an emergency fund.
What happens to the silent second if I sell the house in five years?
When you sell, the silent second is paid off from your sale proceeds before you receive any money. If you owe $200,000 on your primary mortgage and $40,000 on the silent second, and you sell for $300,000, the lender pays off both loans first, and you keep the remainder after real estate commissions and other sale costs.
Can I refinance my mortgage if I have a HomeFirst silent second?
Yes, but you will have to pay off the silent second at refinance time. This means you need enough equity in the home or a high enough new loan amount to cover both payoffs. Talk to your lender about refinance options before you commit to the silent second.
Do I have to be a California resident to use HomeFirst?
Yes. HomeFirst is a California state program and only works for homes purchased in California. If you are moving to another state, you will need to look into that state's down payment assistance programs.
What if I do not may have access to for HomeFirst but still need help with a down payment?
Ask your lender about conventional loans with 3 percent down, FHA loans (which allow 3.5 percent down), or VA loans if you are a veteran. Contact your county housing authority or call 211 to learn about other local or nonprofit down payment programs. Some employers and nonprofits also offer down payment help to their employees or members.