For first-time homebuyers who need extra financial assistance, the CalPLUS FHA Loan with ZIP offers an excellent way to purchase a home with reduced upfront costs. This program combines the benefits of an FHA loan with the CalHFA ZIP program, which provides assistance for closing costs.

It’s important to note that the ZIP program should only be used if you are already utilizing the MyHome program. MyHome provides assistance for down payment and closing costs while maintaining a lower interest rate on your primary mortgage. If all you need is 3.5% assistance for your FHA down payment, MyHome is the better choice. However, if additional help is needed to cover both down payment and closing costs, combining ZIP with MyHome can be an effective strategy. Keep in mind that using both programs means you will have three loans: the first mortgage, the MyHome second, and the ZIP third, resulting in owing up to 103% of the purchase price initially. While this means starting out slightly underwater, market appreciation can help you gain equity within a few years.

Additionally, ZIP loans are sometimes not available depending on market conditions, which can change daily. This means that you could find yourself without the expected ZIP option on the day you enter into a contract, potentially leaving you without the financing you anticipated when making your offer. The good news is that availability can fluctuate daily, so waiting a few days might bring the ZIP option back. However, it's crucial not to wait too long, as you could surpass your contingency period and risk losing your upfront deposit.

The CalPLUS FHA Loan is a 30-year fixed-rate FHA loan with an added feature—borrowers can receive closing cost assistance through the Zero Interest Program (ZIP). This program provides a 2% or 3% loan, which carries no interest and no required monthly payments, helping cover the upfront costs of purchasing a home.

Key Features

1. Closing Cost Assistance: ZIP provides 2% or 3% of the loan amount, covering closing costs with a zero-interest loan.
2. Zero Interest Deferred Loan: No payments are required until the home is sold, refinanced, or paid off.
3. Flexible Credit Requirements: Buyers with credit scores as low as 640 can qualify.
4. Fixed Interest Rate: Provides the stability of a 30-year fixed-rate mortgage.
5. Higher Debt-to-Income Ratios: Depending on credit score, borrowers may qualify with a debt-to-income ratio of up to 50%.

To qualify for the CalPLUS FHA Loan with ZIP, applicants must:

✅ First-Time Homebuyer Status: You must not have resided in a property owned by you or your spouse within the last three years.
✅ Income Limits: Your household income must fall within CalHFA’s county-specific limits.
✅ Primary Residence Requirement: The home must be used as your primary residence.
​✅ Credit Score Requirements: A minimum of 640 for FHA loans.

✅ Lower Out-of-Pocket Costs: The ZIP assistance helps cover closing costs, reducing upfront expenses.
✅ No Monthly Payments on Assistance: The ZIP loan is deferred until the sale or refinance of the home.
✅ Increased Homebuying Power: Enables buyers to afford homes they might not otherwise qualify for.
​✅ Predictable Payments: The fixed-rate structure ensures steady monthly payments.

While the program offers significant benefits, buyers should be aware of:

▶️ Higher Interest Rate: The ZIP program results in a slightly higher mortgage rate on the primary loan.
▶️ Closing Costs Responsibility: Buyers need to cover any remaining costs not covered by ZIP using seller credits or gift funds.
▶️ FHA Mortgage Insurance: FHA loans require mortgage insurance premiums for the life of the loan.

Buyers can view interest rates for all CalHFA programs by visiting CalHFA's official rates page.

✅ Consult with a Mortgage Professional: Let us help determine if the CalPLUS FHA Loan with ZIP is the right fit for your situation.
✅ Prequalification Process: Understand your eligibility and how much assistance you can receive.
✅ Start Your Home Search: Work with a real estate agent to find eligible properties.

Consider these alternatives before making a final decision:

✅ CalHFA FHA with MyHome – Provides down payment assistance for a lower total loan cost.
✅ GSFA Platinum – Offers forgivable loan options with flexible qualification criteria.
✅CalHFA Dream for All – A shared appreciation loan with substantial assistance.

If you need help covering closing costs and are comfortable with a slightly higher mortgage rate, the CalPLUS FHA Loan with ZIP could be a great option. It offers financial flexibility and accessibility to homeownership with minimal upfront expenses.

​Ready to explore your options? Contact us today to learn more and take the next step toward homeownership.