Up to $100,000 Available to Help Eligible California Homeowners Reduce Their Mortgage.

Principal Reduction Program

The Principal Reduction Program* provides assistance to eligible homeowners who have experienced an economic hardship coupled with a severe decline in the home’s value.

Homeowners who qualify for the PRP could be eligible for up to $100,000 in assistance from Keep Your Home California.

The Principal Reduction Program (“PRP”) is one of CalHFA MAC’s federally-funded programs developed with a goal to provide capital to homeowners that have suffered a hardship to reduce the outstanding principal balances of qualifying properties with negative equity.

PRP will provide monies to reduce the principal balance of the first mortgage with a loan recast, a loan modification, or a reduction or elimination of an existing non-interest bearing forbearance, each with the purpose of establishing an appropriate level of debt for eligible homeowners with qualifying properties.


Program Eligibility and Highlights*

  • Up to $100,000.00 per household in assistance.
  • Homeowner must qualify as a low-to-moderate income household.**
  • Homeowners who have recently encountered a financial hardship due to their military service are eligible.
  • Available on a one-time only basis only
  • Homeowner must complete and sign a Hardship Affidavit / 3rd Party Authorization to document the reason for the hardship.
  • Homeowner has adequate income to sustain modified mortgage payments per CalHFA MAC approved investor guidelines.
  • Homeowner must agree to provide all necessary documentation to satisfy program guidelines established by CalHFA MAC.
  • Mortgage loan must be delinquent or meet the CalHFA MAC definition of imminent default as substantiated by homeowner’s hardship documentation. A pre-assistance loan to value of greater than 140% is considered a hardship indicative of imminent default.
  • The homeowner’s modified monthly mortgage payment ratio must be reduced to at least 38% of the gross household income, excluding temporary income (e.g., unemployment or short-term disability benefits), to meet the definition of an affordable payment.

Property and Loan Eligibility Requirements

  • Current unpaid principle balance ("UPB") of the first lien mortgage loan cannot be greater than $729,750.
  • The property securing the mortgage loan must not be abandoned, vacant or condemned.
  • The applicant must own and occupy the property.
  • The property must be the applicant's primary residence.
  • The property must be a single family, 1-4 unit attached or detached house or condominium. (Mobile homes are eligible if they are permanently affixed to the real property that is secured by the first lien.)
  • PRP funds may be used with a loan recast, a loan modification or a reduction or elimination of an existing non-interest bearing forbearance to achieve long term sustainability for the homeowner. Loan modifications that include PRP assistance may or may not include a rate reduction, an adjustment to term or additional forbearance to achieve affordability. PRP funds may be used to reduce or eliminate a non-interest bearing forbearance that was an outcome of a prior loan modification.
  • The property must be located in California.

Program Exclusions

  • Homeowner in an “active” bankruptcy is ineligible for assistance consideration. Homeowners who have previously filed bankruptcy are eligible for consideration with proof of court order “Dismissal” or “Discharge”.
  • Homeowner fails to satisfy lender underwriting guidelines.
  • A principal curtailment that would result in a post-modified loan to value (LTV) of less than 105% or greater than 140%.
  • Homeowner’s pre-assistance total monthly first-lien mortgage payment PITI (principal, interest, taxes, and insurance) and escrowed association fees, as applicable, calculated on the current UPB, including outstanding non-interest bearing forbearance amounts, is less than 31 percent of the homeowner’s gross monthly household income, excluding temporary income (e.g., unemployment and short-term disability benefits), as determined by CalHFA MAC at the time of a homeowner’s application for assistance.

Program Flyers
(English)     (Spanish)

HomeStrong USA is an approved provider of Keep Your Home California's Transition Assistance Program.

* General program eligibility is determined by CalHFA MAC, the housing counselor or servicer based on information received from the homeowner. Program-specific eligibility is determined by CalHFA MAC on a first-come/, first-approved basis until program funds and funding reserves have been exhausted. Loan servicer will implement the HHF program based on participation agreement terms and conditions. Funding allocation will be tracked, monitored and performed by CalHFA MAC in a centralized processing operation.

** Low-to-moderate income of 120% or less of HCD Area Median Income (as defined by the California State Department of Housing and Community Development), for a family of four, in the county where the homeowner resides.