A new two-loan program is giving some Bay Area buyers a shot at skipping the classic 20% down payment and getting the keys with little or no cash at closing. The setup pairs a federal-backed 30-year mortgage with a separate second loan that covers the down payment. Lenders say it is aimed at households with steady paychecks that have struggled to save a big nest egg but are ready to start building equity now instead of watching prices climb from the sidelines.
As reported by NBC Bay Area, the first loan would typically be an FHA or VA 30-year fixed mortgage, with lenders describing rates roughly in the 5.5% to 6.5% range. The down payment piece would come through the National Homebuyers Fund as a 15-year fixed second loan priced about two percentage points higher. San Jose economics professor Dr. Robert Wood told NBC Bay Area he views FHA loans as legitimate products, but warned that mortgage insurance costs can make monthly payments heavier for buyers who are already stretched to the limit.
How the Two-Loan Package Works
The second-loan portion is administered through the National Homebuyers Fund and is meant to bridge the cash-at-closing gap, covering the down payment or closing costs. National Homebuyers Fund notes its programs can supply up to 5% of the mortgage loan amount. The Mortgage Reports explains that NHF assistance can be structured as a grant or, in many programs, as a forgivable second mortgage. That flexibility is why lenders say the product can be layered with FHA, VA, USDA or conventional first loans, which can sharply reduce the upfront cash buyers need to bring in.
Who Qualifies
Eligibility rules vary by lender and by specific NHF product, but NBC Bay Area outlines the basic cutoffs. Homes generally must be priced under about $832,000, borrowers typically need a credit score above 580, and lenders usually will not sign off if projected mortgage payments would eat up more than roughly 45% of income.
NBC Bay Area also highlighted a local case study. Oakland buyer Kenner Juarez used the program to purchase a duplex and paid about $7,000 out of pocket for closing costs. For context, the Federal Housing Finance Agency set the 2026 baseline conforming loan limit at $832,750, which helps explain why many program caps sit near that federal threshold.
Costs to Watch
Borrowers are urged to run the math before celebrating. FHA loans carry mortgage insurance premiums that add both an upfront fee and an annual charge. According to SoFi, borrowers commonly face an upfront MIP near 1.75% of the loan, along with an annual MIP around 0.5% to 0.6%. Those extra charges can noticeably increase monthly payments…