Conventional mortgage got you down? No need to worry. There are lots of great CA home loans for first responders if you know where to look for them. Bad credit home buyers can take advantage of the expanded eligibility requirements of FHA and VA loans. USDA mortgages let you skip the down payment entirely and make low interest monthly payments instead.
And then, of course, there’s the CalHERO home loan for first responders. If you’ve been considering applying for this mortgage or any of the other programs we mentioned above, then you’re in the right place. We at Home Loans For All are qualified home buying experts and we’ve compiled everything you need to know about CA home loans for first responders into a comprehensive and easy-to-read article.
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In this article we will cover all of the home buyer’s assistance you can receive at the state and federal levels if you’re a first responder living in California. This assistance could take the form of home loans, down payment assistance, tax exemptions, and more.
The CalHERO Home Loan
The CalHERO home loan is a California real estate reward savings program that is offered to citizens of California who meet certain employment and income requirements (as described under the next heading.)
A CalHERO home loan comes with much more lenient eligibility requirements than a conventional mortgage. The minimum credit score you must have to apply is only 580 in most counties and caps out at 620 (compared to the 660-700 minimum credit score required by conventional mortgages.)
CalHERO home loans also only require a down payment of 3.5 percent of the total value of the home, as opposed to the more typical 20 percent down payment. In many cases, they require no down payment at all!
They also usually have a greatly discounted interest rate when compared to other loans with similar eligibility requirements, saving you thousands of dollars on your home over time.
All in all, the CalHERO home loan is one of the best California first responder home loans available, provided you meet all the requirements to apply.
Who qualifies for assistance?
You can apply for a CalHERO home loan if you have a credit score of 580 or higher (620 in certain counties) and are purchasing a 1-4 Single family residence or detached PUD/condo that will become your primary residence. You also have to have been previously or currently employed in one of the following positions while living in the state of California:
- Emergency medical technician (EMT)
- College professor
- School administrator
- School staff member (including custodial staff)
- Police officer
- Law enforcement administrative staff
- Peace officer
- Tribal ranger
- Border patrol agent
- Correctional officer
Current or former members of any branch of the armed forces – including anyone serving in the reserves – can also apply. In addition, it doesn’t matter whether you were working for part of the American government or for the Indian Tribal Government provided you held this job somewhere within the state borders.
Beyond that, the eligibility requirements for a CalHERO home loan are very lenient! There’s no application fee, no rate lock fee, and no income limits of any kind. Contrary to popular belief, you also DON’T have to be a first-time home buyer – you can apply whether you’re buying your first home or your fiftieth.
Other California home loans for first responders
The CalHERO home loan is a great program, but not everyone can meet the credit requirements in their area. We at Home Loans For All know as well as anyone else that bad credit can sometimes happen to good people. Plus, it’s possible that CalHERO just might not be the program that works best for you.
With that in mind, here are some other home loans that first responders can consider, including California home loans for first responders with bad credit.
FHA loans for first responders in CA
FHA loans are mortgages that have been insured by the Federal Housing Administration, which agrees to pay back a percentage of these loans to the lender in the event that you have to default on your payments. Because the government provides this extra level of security, private moneylenders will give FHA loans to applicants that might otherwise be rejected outright.
The great thing about FHA California first responder home loans is that they combine affordability with accessibility in a way most other loans don’t. Here’s how it works: say you have a credit score of at least 580. If this is the case, you only have to pay a down payment equal to 3.5 percent of the home’s value on an FHA loan. And if you can afford a larger down payment of up to 10 percent or are working with a lender who accepts alternative credit, you can still get accepted with a score as low as 500 – a full 200 points lower than the minimum credit scores of many conventional mortgages.
FHA loans also have maximum debt-to-income ratios as high as 45 to 50 percent and expanded income limits. Overall, this is the easiest loan for California first responders with bad credit or low income to obtain.
Like the CalHERO home loan, FHA loans are available to first-time and returning home buyers.
VA and CalVet loans for first responders in CA
Like FHA loans, VA loans are insured by a government organization – the federal Department of Veterans’ Affairs. CalVet loans operate the same way (with the same benefits we’re about to describe), but have been insured by the California VA instead of the federal equivalent.
The VA mortgage program is probably the best California first responder home loan with no money down. They are available to buyers who have low income and don’t come with any credit requirement at all (though private lenders may set their own credit requirements on these types of loans.) And if you get accepted for a VA loan, you won’t have to pay any down payment up front, nor will you have to make Private Mortgage Insurance (PMI) payments throughout the course of the loan.
VA and CalVet mortgages also both have low interest rates, although the latter usually ends up being a little cheaper. Now, as you may have guessed, these loans are only available to California first responders who previously served in the military. But if you’re eligible, you should definitely apply!
We usually work with home buyers in California who have bad credit or low income, and as a result, we can’t really recommend that you go with the conventional loan option. With minimum credit requirements of 660 to 700, high income limits, and the insistence that you pay (at least!) twenty percent of the home’s total value as a single down payment, a conventional loan is mostly designed for upper-middle-class home buyers and will not be accessible for many California first responders.
Payment assistance for California first responder home loans
What if you’ve already found a great California first responder home loan but are having trouble with the payments? Well, the California Housing Finance Agency (or CalHFA) works with California first responders to offer down payment assistance and other forms of help to California first responders and anyone else who’s having trouble affording a home.
If the initial down payment is causing you trouble, CalHFA will pay up to 3.5 percent of the price of the value of the home, and you don’t have to pay them back until the rest of the mortgage has been completely paid off. This is known as the MyHome Assistance Program. It’s one of two down payment assistance programs offered by CalHFA – the other is only available to current school teachers or staff.
If you’ve already taken care of the down payment and the monthly payments are proving too much to handle, the Homestead Tax Credit can help you. This exemption lets you withhold up to $7,000 from your property taxes if you are living in a California home that you are still paying off. It’s a great way to save a lot of money, and anyone in the state should be eligible for this exemption.
We hope that this article has taught you a bit more about the CalHERO home loan and all of the great programs that are making it easier to find California home loans for first responders.