Key Differences Between Conventional Loan Programs

From a borrower’s perspective, CalHFA Conventional and CalReady Conventional are functionally identical. They both offer the same 30-year fixed-rate Fannie Mae HFA Preferred first mortgage, share the same interest rates, and utilize the same credit and income guidelines (such as the 680 credit score requirement). The difference is internal to CalHFA: CalReady is funded by taxable bonds, whereas CalHFA Conventional uses different portfolio funding. Lenders select the version that offers the best execution at the time of the rate lock, but the borrower’s experience, payments, and eligibility criteria remain the same for either option.

While the base DTI limit for CalHFA conventional loans is 50% for borrowers with credit scores ≥ 700, the limit changes based on the property type, specifically for Manufactured Homes. Across CalHFA Conventional, CalPLUS, and Dream For All, if you purchase a manufactured home, your DTI is strictly capped at 45.00%, even if your credit score is high. For standard single-family homes, you can go up to 50% DTI if your score supports it. This 45% cap for manufactured housing is a hard overlay applicable to all CalHFA conventional loan versions.

The subordinate loans attached to these programs have specific usage restrictions. ZIP (attached to CalPLUS Conventional) is the most restrictive; it can only be used for closing costs and prepaids, never the down payment. MyHome (used with almost all conventional loans) and MyAccess (used with CalPLUS Access) are flexible; they can be used for either down payment or closing costs. Dream For All is the most versatile due to its size; it covers the down payment and typically has enough remaining funds to cover closing costs and even permanent interest rate buydowns.

For standard CalHFA Conventional and CalPLUS loans, falling below 80% of the Area Median Income (AMI) allows you to use a lower minimum credit score (660 instead of 680) and access discounted mortgage insurance rates. For the Dream For All program, this income threshold changes the repayment cost. If a Dream For All borrower makes ≤ 80% AMI, their shared appreciation repayment ratio drops from 1:1 to 0.75:1. This means they only pay back 15% of the appreciation (on a 20% loan) rather than the standard 20%, providing extra equity protection for lower-income buyers.

Yes, there is a major policy difference regarding subordination. For CalHFA Conventional and CalPLUS loans using MyHome or ZIP, CalHFA generally does not allow re-subordination. If you wish to refinance your first mortgage to a lower rate later, you must pay off the assistance loans in full. However, the Dream For All program allows for a one-time re-subordination for a limited cash-out refinance. This allows Dream For All borrowers to take advantage of future interest rate drops without being forced to immediately repay the 20% appreciation loan.

The financial leverage provided differs significantly. The MyHome Assistance Program, used with CalHFA Conventional and CalPLUS loans, is capped at 3.00% of the lesser of the sales price or appraised value. Since the minimum down payment for a conventional loan is 3%, MyHome is designed to cover just the entry requirement. In contrast, the Dream For All program offers up to 20% of the sales price or value. This larger amount allows borrowers to avoid mortgage insurance entirely and significantly lowers the monthly payment, whereas MyHome borrowers still pay mortgage insurance.

This is a strict difference between the Dream For All program and all other CalHFA conventional loans. For standard programs like CalHFA Conventional, CalPLUS, or CalReady, borrowers must generally be First-Time Homebuyers (haven’t owned a home in 3 years). However, Dream For All requires at least one borrower to be a First-Generation Homebuyer. This is a much tighter standard: you cannot have owned a home in the last 7 years, and your parents must not currently own a home in the U.S. (or didn’t at the time of death). This requirement does not apply to the other programs.

The Dream For All Conventional program differs fundamentally in its repayment structure and assistance amount. Standard programs (like CalHFA Conventional) offer fixed-rate simple interest subordinate loans capped at 3% of the sales price (MyHome). Dream For All offers up to 20% of the sales price (capped at $150,000). Crucially, Dream For All is a Shared Appreciation Loan: you do not pay simple interest. Instead, upon repayment, you pay back the principal plus a share of the home’s appreciation (usually 20%). Other programs require repaying principal plus accrued interest, regardless of the home’s value change.

While both are “CalPLUS” products designed for high-balance assistance, they utilize different subordinate loans. The standard CalPLUS Conventional uses the ZIP loan (0% interest, closing costs only). The CalPLUS Access Conventional replaces ZIP with the MyAccess loan. MyAccess provides a fixed 2.50% of the loan amount but offers greater flexibility: funds can be used for down payment and/or closing costs. However, unlike the 0% ZIP loan, MyAccess carries a 1.00% simple interest rate. This makes “Access” better for those needing down payment help beyond the MyHome cap, while standard CalPLUS is better for pure closing cost needs.

The primary distinction lies in the closing cost assistance attached to the loan. The CalPLUS Conventional program is specifically structured to include the Zero Interest Program (ZIP), a deferred-payment junior loan used exclusively for closing costs. It typically carries a slightly higher interest rate on the first mortgage to offset the benefit of the zero-interest ZIP loan. In contrast, the standard CalHFA Conventional program does not include ZIP; it offers a standard market-competitive interest rate and is typically paired only with the MyHome Assistance Program for the down payment. Borrowers seeking maximum closing cost relief usually choose CalPLUS.