Monthly Payments and Terms of Down Payment Assistance in CalHFA Loan Programs

If you default on your first mortgage and a Notice of Default (NOD) is formally filed and recorded against your property, the terms of your CalHFA down payment assistance loans (MyHome, ZIP, MyAccess, or Dream For All) are accelerated. This means the entire balance of the subordinate loan—including the principal and all accrued interest or shared appreciation—becomes immediately due and payable. This “acceleration” clause ensures that CalHFA’s lien interests are addressed during the foreclosure process, although the first mortgage lender always takes priority in recovering funds from a foreclosure sale.

No, CalHFA subordinate loans do not use compound interest. Programs that charge interest, such as MyHome and MyAccess, utilize simple interest. Compound interest is calculated on the principal plus previously accumulated interest, which causes debt to grow exponentially over time. Simple interest is calculated solely on the original principal amount. This difference saves borrowers a significant amount of money over the long term. For example, a 1% simple interest loan is much cheaper after 30 years than a loan with a compounding rate, ensuring the eventual payoff amount remains predictable.

No, CalHFA does not charge prepayment penalties on its subordinate loans. While payments are deferred, you are permitted to make payments toward the principal balance of the assistance loan at any time without a fee. For the Dream For All program specifically, you can make principal reductions, but doing so does not reduce the shared appreciation percentage you will owe later; paying off the principal in full triggers the immediate requirement to calculate and pay the shared appreciation amount based on the home’s current value.

The MyAccess loan is a subordinate loan available exclusively with the “CalPLUS Access” first mortgage. Similar to the MyHome program, MyAccess carries a 1.00% simple interest rate. The loan amount is fixed at 2.5% of the first mortgage amount. Payments are deferred for the life of the loan (30 years). Repayment is triggered by the sale of the home, refinancing of the first mortgage, transfer of title, or full payoff of the first loan. It resides in a junior lien position, meaning it is paid only after the first mortgage is satisfied.

The Dream For All loan has a 0.00% interest rate, but it includes a “shared appreciation” provision. Instead of paying interest, you repay the original principal plus a percentage of the home’s increase in value. If your income is within standard limits, you typically repay the principal plus 20% of the appreciation. If you are a lower-income borrower (≤ 80% AMI), you repay the principal plus 15% of the appreciation. The repayment amount is capped at 2.5 times the original loan amount. Like other programs, monthly payments are deferred until a trigger event occurs.

For most CalHFA programs, including MyHome, MyAccess, and ZIP, you generally cannot refinance your first mortgage without paying off the assistance loan. CalHFA typically does not allow “subordination” for voluntary refinances, meaning the assistance loan cannot stay in the second position behind a new lender. However, the Dream For All Shared Appreciation Loan has a unique policy: it allows for a one-time limited cash-out refinance of the first mortgage without requiring immediate repayment of the Dream For All loan, provided you meet specific CalHFA resubordination guidelines at that time.

To qualify, the total income of all borrowers must not exceed the CalHFA Income Limits for the county where the property is located. For example, effective June 2025, the annual limit for counties like Alameda and Contra Costa is $316,000, while Los Angeles is $211,000,. Lenders calculate your income using Fannie Mae guidelines for “credit qualifying” purposes. This means that income not used to approve the loan (such as income from a non-borrowing spouse or overtime you don’t need to qualify) typically does not count toward the program cap.

The Zero Interest Program (ZIP) offers distinct terms compared to MyHome. While MyHome has a 1.00% interest rate, the ZIP loan has an interest rate of 0.00%. This means the ZIP loan is interest-free for the life of the loan. If you borrow $5,000 through ZIP for closing costs, you will only owe exactly $5,000 when the loan becomes due, regardless of how many years pass. However, like MyHome, ZIP payments are fully deferred. You cannot use ZIP for a down payment; it is exclusively for closing costs and must be paired with a CalPLUS first mortgage.

The MyHome Assistance Program carries a fixed simple interest rate of 1.00%. It is important to distinguish this from “compound interest,” which charges interest on top of accumulated interest. With simple interest, the cost is calculated only on the original principal balance each year. For example, if you borrowed $10,000, you would accrue $100 in interest annually. Because the payments are deferred, you do not pay this $100 every year; instead, it accumulates in the background. When you eventually pay off the loan (usually when you sell or refinance), you will owe the original balance plus the total accrued simple interest.

No, you do not need to make monthly payments on CalHFA down payment assistance loans, such as MyHome, MyAccess, ZIP, or the Dream For All Shared Appreciation Loan. These loans are structured as “deferred-payment” junior loans. This means that while the debt exists and is recorded as a lien against your property, the payments are postponed for the life of the loan. This structure is designed to keep your monthly housing expenses manageable, as you are only required to pay the principal and interest on your first mortgage, along with your property taxes and insurance, on a monthly basis.