Buying your first home in King City can feel out of reach, especially if the down payment is the main hurdle. You are not alone in wondering how to make the numbers work in South Monterey County. The good news is there are established programs that can lower your upfront costs and make approval easier. In this guide, you will learn which programs fit King City, how they work, and the steps to take next. Let’s dive in.
Top programs for King City buyers
USDA home loans
USDA Single-Family Housing loans are a strong fit for King City and much of South Monterey County because many areas qualify as rural. With a USDA Guaranteed loan, you may be able to finance 100% of the purchase price if you meet income and location rules. Borrowers must use the home as a primary residence and meet credit and debt guidelines. Learn more about program basics on the USDA Rural Development site.
- Explore USDA options on the USDA Rural Development page: USDA Single-Family Housing programs
FHA-insured mortgages
FHA loans are popular with first-time buyers because they have flexible credit guidelines and a minimum down payment of 3.5% for most borrowers who qualify. You will pay mortgage insurance, and the property must meet certain condition standards. FHA can be combined with down payment assistance to reduce cash to close.
- See FHA guidance and homeownership resources from HUD: U.S. Department of Housing and Urban Development
VA home loans
If you are an eligible veteran, active duty service member, or qualifying surviving spouse, VA loans can offer no down payment and favorable terms. A funding fee may apply unless you are exempt. The home must be your primary residence.
- Review eligibility and benefits on the VA site: VA home loan program
CalHFA statewide programs
The California Housing Finance Agency (CalHFA) offers first-time buyer mortgages and down payment assistance that work across the state through participating lenders. Assistance is often a deferred or forgivable junior loan that helps cover down payment or closing costs. Most programs have income and purchase price limits and require a homebuyer education course.
- Get program details and education requirements: California Housing Finance Agency
GSFA down payment assistance
The Golden State Finance Authority provides assistance that can come as grants or forgivable loans when paired with eligible first mortgages, including FHA, VA, USDA, and conventional options. Terms and amounts vary, and you must use a participating lender.
- Check current offerings and lender participation: Golden State Finance Authority
Conventional low-down-payment options
Fannie Mae’s HomeReady and Freddie Mac’s Home Possible allow as little as 3% down for qualifying buyers. These programs usually require private mortgage insurance and have income and underwriting rules. They can sometimes be layered with DPA from CalHFA or GSFA if the lender and assistance provider allow it.
- Learn about Fannie Mae HomeReady
- Explore Freddie Mac Home Possible
Who qualifies and how it works
First-time buyer definition
Many programs define a first-time buyer as someone who has not owned and occupied a home in the past three years. Always confirm the exact definition with the program and your lender.
Income and price limits
Down payment assistance and some first mortgages set household income and purchase price caps that vary by county and size of household. Limits change, so verify the current numbers for Monterey County with the program administrator or a participating lender.
Credit, debt, and underwriting
FHA tends to be more flexible on credit scores and allows 3.5% down for qualifying borrowers. Conventional programs like HomeReady and Home Possible require private mortgage insurance and have lender-specific score and ratio guidelines. USDA uses standard credit and debt-to-income rules and may allow lower scores with strong compensating factors.
Property and occupancy rules
Most programs require you to live in the home as your primary residence. USDA properties must be in an eligible rural area. Some assistance excludes investment properties and may limit purchases to single-family homes, with condos allowed only if they meet program approvals.
Homebuyer education
CalHFA and many DPA programs require you to complete an approved homebuyer education course before closing. This class helps you understand budgeting, loan terms, and long-term homeownership.
- Find HUD-approved counseling and education: HUD counselor locator
How DPA is repaid
Assistance can be structured as a grant, a deferred and possibly forgivable junior loan, or a repayable second mortgage. The terms affect your total monthly costs and how refinancing works later. Review the exact repayment rules with your lender before you commit.
Smart ways to combine help
- Pair a USDA, FHA, VA, or conventional first mortgage with CalHFA or GSFA down payment assistance to reduce your cash to close.
- Ask your lender about seller credits for closing costs. When allowed, combining seller credits with DPA can further lower upfront costs.
- Look into Mortgage Credit Certificates if available through Monterey County. MCCs can reduce federal income tax liability by crediting a percentage of your mortgage interest, subject to IRS rules. Availability changes, so ask county housing staff if MCCs are active.
Step-by-step game plan
- Get prequalified with a lender who regularly works with USDA, FHA, CalHFA, GSFA, and conventional low-down programs in Monterey County.
- Confirm property eligibility for USDA on the USDA site and discuss loan program fit based on your credit, income, and goals.
- Contact a HUD-approved housing counselor for guidance and to complete any required education early in the process.
- Speak with Monterey County housing staff and the City of King City planning or housing contacts to ask about current DPA or MCC offerings and approved lender lists.
- Compare loan estimates from participating lenders. Ask about lender overlays, required reserves, and DPA layering rules.
- Assemble documents and stay responsive to underwriting requests to keep your timeline on track.
Documents checklist
- Government ID and Social Security number
- Most recent 30 days of pay stubs
- Last 2 years of W-2s and federal tax returns
- Two months of bank statements for all accounts
- Statements for retirement or investment accounts, if used for funds to close
- Landlord verification or housing history, if requested
- Certificate of completion for homebuyer education, if required
Local contacts in Monterey County
- Monterey County Department of Housing and Community Development. Ask about any active first-time buyer assistance, county income and price limits, and whether MCCs are available.
- City of King City planning or housing staff. Confirm whether city-specific down payment assistance or inclusionary programs are open for applications.
- HUD-approved housing counselors serving Monterey County. They can help you assess eligibility, complete education, and plan your budget.
Timing and what to expect
Most first-time buyer loans close in about 30 to 60 days. Adding down payment assistance introduces an extra approval step, so start early and submit documents quickly. Your appraisal, title work, and any condo or property approvals can affect the schedule. Build in a cushion if your purchase involves DPA or multiple program approvals.
Avoid common pitfalls
- Not verifying program availability. Assistance changes often, so confirm current terms with the administrator and your lender.
- Overlooking lender overlays. One lender might require a higher score or more reserves than another.
- Missing resale or occupancy rules. Some local DPA includes affordability periods or recapture terms. Understand how they affect refinancing, resale, or renting out the home.
- Assuming all condos qualify. FHA and other programs may require project approval. Ask your lender to confirm.
Your next move in King City
If you want a clear path to your first home in South Monterey County, start with financing. Get prequalified with a participating lender, complete homebuyer education, and ask county and city housing staff about current assistance. With the right plan, you can reduce upfront costs and buy with confidence.
If you would like local guidance tailored to King City and the Salinas Valley, reach out to our team. We can help you align the right loan program with the right home and negotiate terms that support your budget. Connect with Homes by Henson to start your plan today.
FAQs
What first-time buyer programs exist in King City?
- In South Monterey County, common options include USDA Single-Family Housing loans, FHA loans, VA loans for eligible borrowers, CalHFA mortgages with down payment assistance, GSFA assistance, and conventional 3% down programs like HomeReady and Home Possible.
Can I buy with no down payment in King City?
- Possibly. USDA Guaranteed loans and VA loans can allow 0% down for qualified borrowers, subject to income, property location, and eligibility rules.
How do I check if a King City home is USDA-eligible?
- Use the USDA Rural Development site to review program details and property eligibility tools, and verify with your lender before making an offer.
Do I have to repay down payment assistance in Monterey County?
- It depends on the specific program. Assistance can be a grant, a deferred or forgivable junior loan, or a repayable second mortgage with monthly payments.
What are typical income and price limits for assistance?
- Limits vary by program, county, and household size, and change over time. Confirm current Monterey County limits with the program administrator or a participating lender.
Can I combine DPA with FHA or conventional loans?
- Many buyers layer CalHFA or GSFA assistance with FHA or conventional first mortgages, but compatibility depends on the lender and program rules.
How long will my first-time buyer loan take to close?
- Expect roughly 30 to 60 days, with additional time possible for DPA approvals, appraisal, and any required property or condo reviews.
Is homebuyer education required for CalHFA or GSFA?
- Often yes. Many CalHFA and nonprofit assistance programs require an approved education course before closing. You can find providers through HUD’s counselor locator.
