Buying in Sacramento but worried the down payment will hold you back? You are not alone. Many first-time buyers and move-up buyers use assistance to bridge the gap between savings and what lenders require. In this guide, you will learn the main types of down payment help, where to find programs in Sacramento, who typically qualifies, and how the process works from start to finish. Let’s dive in.
Down payment assistance types
Understanding the structure helps you compare options and long-term costs.
- Deferred second mortgage: A subordinate loan for your down payment with no monthly payment, typically due when you sell, refinance, or pay off the first mortgage.
- Forgivable loan or grant: Assistance that is forgiven after you live in the home for a set period and follow program rules. Selling or refinancing early can trigger partial repayment.
- Amortizing second mortgage: A standard second loan with monthly payments. Less common but available through some programs.
- Local agency grant: A lump sum that does not need to be repaid if you meet occupancy and program conditions.
- Mortgage Credit Certificate (MCC): A federal tax credit issued by a local agency. It does not provide cash at closing, but it can improve your after-tax affordability.
- Lender credits and institutional DPA: Some lenders and statewide issuers offer credits or assistance that can reduce closing costs in exchange for a slightly higher interest rate.
- Government loans that reduce down payment: FHA, VA, and USDA loans are not DPA by themselves, but they lower or remove down payment requirements and can sometimes pair with assistance.
Sacramento programs to explore
Funding cycles and rules change. Always verify current details with the administering agency.
CalHFA statewide programs
The California Housing Finance Agency is a primary source of DPA that pairs with CalHFA first mortgages. CalHFA’s offerings often include deferred or forgivable second loans, required homebuyer education, and a participating lender network. Start with the program overview on the CalHFA website.
GSFA lender-partner options
The Golden State Finance Authority works with participating lenders to deliver DPA across California. Programs may operate as grants or forgivable loans, depending on the product and eligibility. Learn more on the GSFA site.
SHRA local assistance
The Sacramento Housing and Redevelopment Agency administers homebuyer assistance for the City and County of Sacramento. SHRA programs may include down payment or closing cost help, homebuyer education, and information about MCCs if offered locally. Explore current offerings on the SHRA website.
City of Sacramento programs
The City may fund homebuyer assistance directly or through SHRA, depending on the program year and funding. Availability can open and close with budget cycles. Check the City of Sacramento site for program updates.
Sacramento County programs
Outside city limits, Sacramento County may offer assistance, education, or MCCs through its Housing and Community Development department. Because programs evolve, verify details on the Sacramento County website.
Federal loan pathways
- FHA loans allow low down payments and can often pair with DPA when program rules permit. You can confirm general federal program info on HUD’s counseling search page and connect with a HUD-approved counselor.
- VA loans offer eligible veterans and service members a zero-down option. Read about benefits on the VA home loan page.
- USDA loans provide zero-down options in eligible rural areas, which can include some exurban parts of the county. Review program details on USDA Rural Development.
Eligibility and documentation
Most programs share common rules, though details vary.
- First-time buyer status: Often defined as not owning a primary residence in the last three years. Some programs make exceptions for specific groups.
- Income limits: Many set income caps based on Sacramento County Area Median Income and household size. Check current thresholds on HUD’s income limits tool.
- Purchase price limits: Programs cap the price of eligible homes to align with affordability goals.
- Primary residence: You must live in the home. Investment properties do not qualify.
- Property standards: Homes must meet lender and program standards. Some programs exclude certain property types or require repairs.
- Credit and DTI: Minimum credit scores and acceptable debt-to-income ratios apply and may differ by program and lender.
- Homebuyer education: Many programs require a HUD-approved or agency course before closing.
Have these documents ready:
- Recent pay stubs, W-2s, and two years of tax returns
- Bank statements and asset documentation
- Photo ID and Social Security numbers
- Employment information and verification
- Purchase contract once you are under contract
- Homebuyer education certificate, if required
- Any program forms or affidavits
Step-by-step process
- Prequalify with a participating lender: Discuss loan options and DPA fit. A lender and a HUD-approved counselor can help you map next steps.
- Select a program and lender: Confirm that your chosen DPA pairs with your loan type and that the lender participates.
- Search and offer: Focus on homes that meet price caps and property standards. Your agent can help screen listings.
- Apply for DPA: Complete homebuyer education if required and submit your documentation, often alongside the first mortgage application.
- Underwriting: The lender underwrites the first mortgage while the DPA underwriter reviews eligibility.
- Closing: Assistance is delivered at closing as a grant or as a subordinate lien, per program rules.
- Post-closing compliance: Some programs verify occupancy or limit resale for a set period.
Key tradeoffs and risks
- Funding is limited: Programs can pause or run waitlists. Reserve funds early when possible.
- Second lien effects: Deferred or forgivable seconds can affect future refinancing, since the lien may need to be subordinated or paid off.
- Tax considerations: MCCs are a tax credit that can improve affordability. For personal tax advice, consult a tax professional.
- Rate vs. costs: Lender credits can reduce upfront costs but may come with a slightly higher interest rate. Compare total cost over time.
Pro tips to get started
- Talk to a HUD-approved counselor: Get education and a clear action plan using the HUD counseling search.
- Start with official program pages: Review current eligibility and lender participation at CalHFA, GSFA, and SHRA.
- Confirm local availability: Check the City of Sacramento and Sacramento County sites for active programs and timelines.
- Work with a DPA-savvy agent and lender: Coordinated timing, documentation, and property selection help avoid surprises at underwriting.
When you are ready to explore options, reach out for local guidance tailored to your goals. As a hands-on, education-first advisor, Ginny Ritz can help you compare programs, coordinate with lenders, and plan a smooth path to keys in hand.
FAQs
What is down payment assistance in Sacramento?
- It is financial help from state, local, or lender-partner programs that covers part of your down payment or closing costs, often as a grant or a deferred second loan.
Which Sacramento agencies offer assistance?
- Start with CalHFA, GSFA, and SHRA, plus the City of Sacramento and Sacramento County program pages.
Who typically qualifies for these programs?
- Many programs target first-time buyers with income and purchase price limits, owner-occupancy requirements, and completion of homebuyer education.
Can I use DPA with FHA, VA, or USDA loans?
- Often yes for FHA and sometimes for conventional loans, while VA and USDA have their own rules; confirm pairing with a participating lender and the program administrator.
How does a deferred second affect refinancing later?
- A second lien may need to be subordinated or paid off to refinance your first mortgage; review program rules before you plan a refinance.
Where can I find homebuyer education in Sacramento?
- Use the HUD counseling search to find approved local education and counseling providers.
