How it works
ZIP exists to solve a specific problem: a CalHFA first-time buyer has enough for the FHA 3.5% down (via MyHome or saved funds) but lacks the additional 2-4% needed to cover closing costs.
ZIP is a deferred, zero-interest second mortgage that can only be paired with a CalPLUS first mortgage — either CalPLUS FHA or CalPLUS Conventional. CalPLUS products carry a slightly elevated note rate compared to standard CalHFA first mortgages; that rate premium is what funds the zero-interest ZIP subsidy. CalHFA is essentially letting the borrower trade a slightly higher rate on the first mortgage for a fully subsidized closing-cost loan.
ZIP stacks with MyHome (which handles down payment), MCC (which gives an annual federal tax credit), and any seller concessions negotiated in the purchase contract. The classic four-way stack looks like this: CalPLUS FHA first mortgage + MyHome covering 3.5% down + ZIP covering 3% closing costs + 2% seller credit. Borrower brings ~$500-$1,000 to close and walks into the home.
Who it's for
CalHFA first-time buyers who need help with closing costs on top of MyHome down payment assistance.
Eligibility at a glance
- First-time buyer?
- Yes
- FTB definition
- Has not owned and occupied a home in the past 3 years.
- Minimum FICO
- 660
- Maximum DTI
- 45%
- Income limit
- Same income limits as the paired CalPLUS FHA or CalPLUS Conventional first mortgage.
- Homebuyer education
- Same 8-hour requirement as the paired first mortgage.
- Minimum borrower contribution
- None required.
Repayment terms
Silent second mortgage with 0% interest, deferred for 30 years or until sale, refinance, or transfer of title.
Term
30 years
Interest
0% (deferred)
Due at
Sale, refinance, or transfer of title
Property rules
- Eligible property types
- Single-family residence, Condo, PUD, Manufactured (HUD)
- Owner-occupancy required
- 30 years
Layering & first mortgage options
Works with these first mortgages: CalPLUS FHA, CalPLUS Conventional
ZIP requires the CalPLUS first-mortgage variant — the standard CalHFA FHA and CalHFA Conventional first mortgages don't include ZIP. CalPLUS carries a slightly higher interest rate than standard CalHFA first mortgages to fund the ZIP assistance.
Cannot combine with
How to apply
Process: Reserved at first-mortgage lock through a CalHFA-approved lender. Automatically paired with CalPLUS products.
Funding cycle: Continuous.
Things that trip borrowers up
- Borrowers sometimes confuse ZIP (closing costs) with MyHome (down payment). They do different jobs and can be stacked.
- CalPLUS rates are higher than standard CalHFA first mortgages — only use ZIP if the borrower genuinely needs closing-cost help.
- ZIP cannot be used for down payment. On an FHA 3.5%-down file, the borrower still needs the 3.5% from savings, MyHome, or gift.
Frequently asked questions
- Is ZIP really free money?
- Not exactly. ZIP charges zero interest and has no monthly payment, but it is a lien that must be repaid at sale, refinance, or transfer. It also requires you to take a CalPLUS first mortgage, which has a slightly higher rate than standard CalHFA FHA or Conventional.
- Can I use ZIP for down payment?
- ZIP is designed for closing costs, not down payment. For down payment help, use MyHome (deferred) or Dream For All (shared appreciation).