Home › Loan options › First-Time Home Buyer
Buy your first home with less down than you think
As a brokerage, North Bay Capital shops a wide range of first-time buyer loans so you can compare 3.5% down, 3% down, and even zero-down options side by side. We walk you through every step in plain English, from pre-approval to keys in hand.
First-time buyers in Sonoma County and across California have several low- and no-down-payment paths: FHA at 3.5% down, conventional loans at 3% down, and VA or USDA loans at zero down. North Bay Capital compares these options for you, helps layer in down payment assistance and gift funds, and explains the process step by step.
Programs we broker
The options under first-time home buyer — and the right fit for each.
FHA Loan (3.5% Down)
The most forgiving entry point into homeownership.
FHA is the program that gets most first-time buyers across the finish line. It's a government-insured loan that lets you put just 3.5% down with a credit score as low as 580, and the underwriting is friendlier to thinner credit files, recent job changes, and modest savings than conventional financing.
The trade-off is mortgage insurance — both an upfront premium rolled into the loan and a monthly amount that sticks for the life of the loan in most cases. For a lot of buyers, that's a fair price for getting into a house years sooner than they otherwise could.
- Buyers with credit in the 580-680 range
- Limited savings beyond the minimum down
- Recent credit hiccups outside the last 12 months
- Using gift funds from family
Conventional 97 / HomeReady / Home Possible (3% Down)
Three percent down without the lifetime mortgage insurance.
These are the three big conventional low-down-payment programs: Fannie Mae's Conventional 97 and HomeReady, plus Freddie Mac's Home Possible. All three let qualified first-time buyers put just 3% down. HomeReady and Home Possible are income-based — currently capped around 80% of area median income — and they come with reduced mortgage insurance and discounted pricing for buyers who fit.
The big advantage over FHA: the PMI drops off automatically once you reach 22% equity, and it's typically cheaper month-to-month for buyers with solid credit. You'll generally want a 620+ score, though 680+ is where the pricing really sharpens.
- Buyers with 680+ credit who want PMI to eventually drop off
- Moderate-income buyers who qualify for HomeReady / Home Possible pricing
- Avoiding FHA's lifetime mortgage insurance
- First-time buyers competing in a multiple-offer market
VA Loan (0% Down for Veterans)
The single best mortgage in America — if you've earned it.
If you're an eligible veteran, active-duty service member, National Guard or Reservist, or a qualifying surviving spouse, the VA loan is almost always going to beat every other option. Zero down, no monthly mortgage insurance, competitive rates, and underwriting that's more forgiving on credit and debt-to-income than conventional.
There's a one-time VA funding fee built into the loan (waived for veterans with a service-connected disability rating), and you'll need your Certificate of Eligibility — which I can pull for you in a few minutes. For first-time buyers who served, this is the program.
- First-time buyers who served on active duty
- Reservists and National Guard with six years of service
- Surviving spouses of service members
- Veterans refinancing into a purchase after renting
USDA Loan (0% Down Rural)
Zero down for buyers in eligible rural and small-town areas.
USDA's Section 502 Guaranteed loan lets you buy with no money down in any area the USDA classifies as rural — which in California includes a surprising amount of Sonoma, Mendocino, Lake, and Napa County. Income has to be at or below 115% of the area median for your household size, and the property has to be in an eligible census tract.
Rates are competitive with FHA, there's no monthly PMI in the traditional sense (USDA charges a smaller annual fee instead), and the underwriting is reasonable. If you're buying outside the major metros, it's worth checking the USDA eligibility map before assuming FHA is your only zero-or-low-down option.
- Buyers in outer Sonoma County, Lake, Mendocino, or rural Napa
- Households at or below moderate income
- Buyers with no down payment saved
- Small-town California outside major metro centers
CalHFA Dream For All Shared Appreciation Loan
California's shared-appreciation second that can cover your entire down payment.
Dream For All is California's headline first-time buyer program. CalHFA provides a silent second loan worth up to 20% of the purchase price (capped around $150,000 currently — verify for your scenario) that you pair with a CalHFA first mortgage. There are no monthly payments on the second.
When you sell, refinance, or transfer the home, you pay back the original amount plus a share of the appreciation — typically 20% of the home's appreciation for most buyers, less for lower-income borrowers. Funds are limited and the program runs in funding rounds, so timing matters. Income limits, first-time buyer status, and homebuyer education are all required.
- First-time buyers in California with little or no down payment
- Buyers willing to share future appreciation for zero down today
- Households within CalHFA income limits for their county
- Pairing with a CalHFA first to eliminate out-of-pocket cash
CalHFA MyHome Assistance Program
A deferred-payment second to cover down payment and closing costs.
MyHome is CalHFA's other big tool, and it pairs with a CalHFA first (FHA, conventional, VA, or USDA). It's a silent second of up to 3.5% of the purchase price or appraised value — whichever is less — with no monthly payments. The balance just sits there until you sell, refinance, or pay off the first.
MyHome is usually the right call when you don't qualify for Dream For All or when Dream For All funding is closed for the round. It stacks with other CalHFA programs and the federal MCC. Income limits apply by county, and you'll need to complete homebuyer education.
- First-time buyers needing help with down payment AND closing costs
- Buyers who can't access Dream For All funding
- Stacking with an MCC for ongoing tax benefit
- CalHFA FHA or Conventional first-mortgage buyers
Mortgage Credit Certificate (MCC)
A federal tax credit that puts mortgage interest back in your pocket every year.
An MCC isn't a loan — it's a federal tax credit certificate that lets first-time buyers claim a percentage of their annual mortgage interest as a dollar-for-dollar credit against their federal income tax, every year for the life of the loan. In California, MCCs are administered by counties and CalHFA at varying credit rates (commonly 20%).
The math works out to a real ongoing savings for buyers who itemize or who restructure their W-4 withholdings to capture the credit during the year. It pairs with most first-time buyer first mortgages, including CalHFA programs. Availability is local — not every California county runs an MCC program — so we check what's active when you start your file.
- First-time buyers who want ongoing tax savings, not just upfront help
- Buyers in California counties with an active MCC program
- Stacking with CalHFA MyHome or Dream For All
- Higher-bracket borrowers who'll capture the full credit each year
Calculators for this loan
Mortgage Affordability
How much home you can comfortably afford based on income and debts.
Down Payment
Target down payment, PMI impact, and savings timelines.
Debt-to-Income
Front-end and back-end DTI versus lender thresholds.
Mortgage Payment & Amortization
Monthly payment, full amortization schedule, and interest totals.
What people ask before they apply
What actually counts as a first-time home buyer?
For most programs, a first-time buyer is anyone who has not owned a primary residence in the past three years. So even if you owned a home years ago, you may qualify again. Some assistance programs have their own definitions, which we confirm before you apply.
How much do I really need for a down payment?
It depends on the loan. VA and USDA can be zero down for eligible buyers, several conventional programs go as low as 3%, and FHA needs 3.5%. On a $600,000 home, that ranges from $0 to about $21,000. Closing costs and reserves are separate, but gift funds, seller credits, and assistance can cover much of that.
Will a lower credit score stop me from buying?
Not necessarily. FHA loans can work with scores as low as 580 at 3.5% down (or 500-579 with 10% down), while most conventional programs start around 620. If your score needs work, we will tell you the few specific moves that tend to raise it fastest before you apply.
Can my parents or family help with the down payment?
Yes. On many first-time buyer loans your entire down payment can come from a documented gift, and conventional loans accept gift funds too. We will give you a simple gift-letter template and tell you exactly which bank statements underwriting needs so the gift is accepted without delays.
What is mortgage insurance and will I pay it forever?
Mortgage insurance protects the lender when you put less than 20% down. On conventional loans it is PMI, which can usually be canceled once you reach about 20% equity. On FHA loans the annual premium typically stays for the life of most loans. We compare the long-term cost of each so you pick the one that is cheaper for how long you plan to stay.
Are there special first-time buyer programs in California and Sonoma County?
Yes. CalHFA offers statewide down payment assistance such as MyHome, structured as a deferred second loan you do not repay until you sell, refinance, or pay off the home. Local and county programs come and go. As a broker, we track which are currently funded and which lenders can pair them with your first mortgage.
How long does the whole process take?
From a complete application, many purchase loans close in about 30 to 45 days, though it varies with the program and the property. The smartest first step is a pre-approval before you shop, so you know your budget and sellers take your offer seriously. We can usually issue one within a day or two of receiving your documents.
Why use a broker instead of going straight to a bank?
A bank can only offer its own products. As a brokerage, North Bay Capital shops many lenders and programs at once, so you can compare FHA, conventional, VA, USDA, and assistance options side by side and choose the lowest overall cost for your situation. You also get a real person, Jesse, who answers the phone.
Jesse Gonzalez, President & Founder
NMLS #278103 · CA DRE #01855372 · Last reviewed June 24, 2026
Let's find the first-time buyer loan that fits your numbers
You do not have to figure this out alone. Call North Bay Capital at 707-595-5393 or email jesse@northbaycap.com for a straight, no-pressure conversation about your down payment, your credit, and the programs you qualify for. We will compare your options and map out the path to your first home in Sonoma County or anywhere in California.