Many homebuyers find that closing costs can be a major hurdle when purchasing a home. The
CalHFA ZIP Program (Zero Interest Program) is designed to provide financial assistance to cover closing costs, helping buyers make their dream of homeownership a reality.

The CalHFA ZIP Program offers a zero-interest loan to assist with closing costs. This assistance provides either 2% or 3% of the loan amount, helping buyers cover out-of-pocket expenses at closing. However, it’s important to note that while ZIP may seem like a free program, it requires accepting a higher interest rate on the first mortgage, which increases monthly payments. This makes the ZIP loan not truly free, as the marketing may imply.

▶️ Zero Interest Loan: No interest accrues on the ZIP loan, and repayment is deferred until you sell, refinance, or pay off the first mortgage.

▶️ Helps Cover Closing Costs: Provides an additional source of funds to cover fees and expenses associated with closing.

▶️ Best Used When MyHome Assistance Is Insufficient: ZIP should only be used if the MyHome assistance is not enough to cover your total upfront costs.

​▶️ Market Availability: Due to its funding structure, ZIP availability depends on current mortgage rate conditions, and there are times when the program may not be available.

To be eligible for the CalHFA ZIP Program, applicants must meet the following criteria:

✅ Income Limits: Household income must fall within county-specific limits.

✅ First-Time Homebuyer Status: You must not have resided in a property owned by you or your spouse in the last three years.

✅ Primary Residence Requirement: The home must be owner-occupied.

▶️ Reduced Out-of-Pocket Expenses: ZIP assistance can cover significant closing costs.

▶️ Zero Interest Costs: No interest accrues, making it a cost-effective solution for buyers.

▶️ Increased Buying Power: Helps buyers afford homes in competitive markets by covering extra costs.

While the ZIP Program offers valuable benefits, there are some key factors to keep in mind:

▶️Higher First Mortgage Interest Rate: Choosing ZIP results in a higher mortgage interest rate, which can increase long-term costs.

▶️Availability Depends on Market Rates: ZIP is funded by higher mortgage rates that provide lender credits, meaning it may not always be available depending on market conditions.

▶️Only Use When Necessary: It’s recommended to only use ZIP if MyHome assistance isn’t enough to cover closing costs.

✅ Talk to an Expert: Contact us to determine if ZIP and MyHome are the right fit for your situation.

✅ Get Prequalified: Understand how much assistance you may qualify for and how it will impact your mortgage.

✅ Plan Your Budget: Work with our team to evaluate closing costs and available assistance.

Before deciding on the ZIP Program, consider other down payment assistance options, such as:

▶️CalHFA MyHome – Offers direct down payment assistance with lower long-term costs.

▶️GSFA Platinum – Provides forgivable loans for qualified homebuyers.

▶️GSFA Open Doors – Flexible qualification requirements with grant options.

If covering closing costs is a significant barrier to homeownership, the CalHFA ZIP Program can provide valuable support. However, understanding how it affects your mortgage rate and overall costs is crucial.

​Ready to learn more? Contact us today to discuss how the ZIP Program can work for you and explore your homeownership options.