4 CalHFA loan options for self-employed first-time buyers in California

Which CalHFA programs can a self-employed first-time buyer use?

The income limit is the first gate. CalHFA publishes its limits county by county, and they can differ by program. Look up San Diego County's figure for the exact program you want before you count on it.

How I picked these four

I picked the CalHFA programs that pair with an FHA or conventional loan. Those are the ones most self-employed first-time buyers in San Diego will look at. I'm a broker, so I shop one file across many wholesale lenders, and FHA and conventional are where most of those files start.

I left two programs out. CalHFA VA needs a valid VA certificate of eligibility, which only veterans and service members can get. CalHFA USDA carries USDA's own income limits and rural-area rules, and where USDA's limit is tighter than CalHFA's, the tighter one applies. If you're a veteran or you're shopping outside the city, ask about those two separately.

CalHFA FHA

Who CalHFA FHA fits

According to CalHFA, the CalHFA FHA program is an FHA-insured 30-year fixed-rate first mortgage offered through CalHFA-approved lenders. It fits buyers whose income is under the county limit. Its own page doesn't require you to be a first-time buyer, so a past owner can still use the first mortgage.

What CalHFA FHA costs

FHA loans usually carry their own insurance, called a mortgage insurance premium (MIP), charged up front and inside the monthly payment. CalHFA's page states no rate, credit score or insurance cost, so I won't guess one.

The upside is the pairing. With CalHFA FHA, MyHome Assistance can reach 3.5%, the larger of its two amounts. That means more of your cash to close can come from the second loan.

What to watch with CalHFA FHA

Watch the moment you add MyHome. The first mortgage alone doesn't ask about ownership history, but the assistance does. And the lender has to be one CalHFA has approved, so ask that question first.

CalHFA Conventional

Who CalHFA Conventional fits

According to CalHFA, the CalHFA Conventional program is a conventional first mortgage with private mortgage insurance and a rate fixed for the full 30 years. Private mortgage insurance (PMI) protects the lender if a borrower stops paying. This loan fits buyers under the county limit who would rather carry PMI than FHA insurance. Like the FHA version, it doesn't need first-time status on its own page.

What CalHFA Conventional costs

CalHFA states no PMI cost and no down payment minimum. On conventional loans, PMI can usually come off later as you build equity, which FHA insurance often doesn't do. Our step checklist for removing PMI shows how that works.

Paired with this loan, MyHome Assistance tops out at 3% instead of 3.5%. So you trade a little less help now for insurance that can end.

What to watch with CalHFA Conventional

Fannie Mae has its own ceiling. Under Fannie Mae's Selling Guide, a purchase loan sold to Fannie Mae can reach 97% of the home's value, which is 3% down. Above 95%, at least one borrower must be a first-time buyer.

That's Fannie Mae's rule for loans it buys, not CalHFA's. It matters because a thin down payment can bring first-time status back into play on the conventional side.

MyHome Assistance

Who MyHome Assistance fits

According to CalHFA, MyHome Assistance is a deferred-payment second loan for down payment or closing costs, and only first-time buyers can use it. CalHFA defines a first-time buyer as someone who hasn't owned and lived in a home in the last three years and hasn't lived in a spouse's home in that time.

CalHFA adds that exceptions may apply, without listing them. If your history is close to the line, ask a CalHFA lender before you assume you're in or out.

What MyHome Assistance costs

MyHome pays up to the lesser of 3.5% of the price or appraised value with CalHFA FHA, or 3% with CalHFA Conventional. Say you buy a $500,000 home as an example: 3.5% is $17,500 and 3% is $15,000.

CalHFA calls these "silent seconds": no payment is due until you sell, refinance or pay the loan off. The balance still comes due then, so it's money you repay later. The rate and lender fees vary by lender.

What to watch with MyHome Assistance

Plan for the class. CalHFA requires homebuyer education through an eligible counseling group, with a certificate at the end. Only one occupying first-time borrower per loan has to take it. A refinance also ends the quiet period, so think about that before you take this help.

Dream For All

Who Dream For All fits

According to CalHFA, Dream For All gives first-generation buyers up to 20% of the price, capped at $150,000, for down payment or closing costs. It's used with the Dream For All Conventional first mortgage. Your combined household income has to meet the limit for the county where you buy.

The first-generation test is stricter than the first-time test. At least one borrower must have no U.S. home ownership or mortgage in the last 7 years, plus pass the parent or foster-care test in the table above. Every borrower must also be a first-time buyer.

What Dream For All costs

You pay this one back with interest in the form of growth. When you sell, transfer or pay off the first mortgage, you repay the original loan plus a share of the appreciation. CalHFA's own examples, for a loan of 20% of the price, look like this.

Area median income is the middle income for your area. As a worked example, if your home gains $100,000 in value, 20% of that is $20,000 and 15% is $15,000, on top of the original loan. In CalHFA's examples, the share scales with how big the loan is compared with the home's value.

What to watch with Dream For All

Right now you can't apply. CalHFA's page says the application period is closed, and it doesn't say when or whether a next round opens. The $150,000 cap has also changed between rounds.

When a round does open, you register for a voucher, and a random drawing picks who gets one. Being first doesn't help. Registering takes a lender's pre-approval letter and a 1-hour education course, so have those done before the window opens.

Can I use CalHFA if my tax returns show less than I make?

You can apply for CalHFA as a self-employed buyer, but its first mortgages are FHA and conventional loans. Those usually read the income your documents show. Lower reported income can keep you under a county limit. It can also shrink the loan amount underwriting may allow.

I don't have CalHFA's rule on how many years of returns it wants, or how it counts self-employed income against its limits. Ask a CalHFA lender both questions directly. Your write-off strategy is a question for your CPA, not me.

Your returns aren't the only way to prove income, though. I close bank-statement and asset-based loans that retail banks turn away. That's a separate path from CalHFA, so you'd pick one or the other. Different lenders want different deals. Read how bank-statement loans work if your returns look thin.

How I know this

My advice rests on 21 years placing loans in San Diego as a broker, and on CalHFA's own program pages. I once sat down with a couple renting in Lemon Grove to run the Dream For All payoff math before they applied. We treated the shared appreciation as a real cost. They chose to stop renting rather than save for years. Funds went fast that round, so their early paperwork mattered.

How to choose

Start with two facts about you: your income against San Diego County's CalHFA limit, and your ownership history. Those two decide almost everything.

• If you're under the limit and haven't owned and lived in a home for three years, compare CalHFA FHA and CalHFA Conventional, each paired with MyHome Assistance.
• If you want more help with cash to close, MyHome's 3.5% with FHA beats its 3% with conventional. Weigh that against PMI that can come off later.
• If you pass the first-generation test and can accept repaying a share of appreciation, get ready to register when a Dream For All round opens.
• If you've owned recently, the CalHFA first mortgages may still work without MyHome. Ask about CalHFA's exceptions.
• If you're over the limit or your returns won't support the loan, CalHFA doesn't fit, and a non-CalHFA loan is the path. What sets your payment on a $150K income is a good next read.

For a second opinion, the CFPB points buyers to HUD-approved housing counselors for independent advice and local programs. The CFPB is the Consumer Financial Protection Bureau; HUD is the U.S. Department of Housing and Urban Development.

This page isn't a commitment to lend. Underwriting decides every approval, and CalHFA's rules and limits change by round and county.

My rule: if your documented income is under the county limit and you haven't owned in three years, look at a CalHFA first mortgage with MyHome. If you also pass the first-generation test, watch for the next Dream For All drawing. If neither fits, a non-CalHFA loan is your path. Either way, run your numbers on the calculator here to see what the payment actually looks like, with no credit pull.

Questions people ask