This new loan program can be your ticket to homeownership.
We have exciting news for first-time homebuyers in California! The California Housing Finance Agency (CalHFA) is launching a new loan program called Dream for All Shared Appreciation Loan through Senate Bill 197, which will be available from March 27, 2023. The program aims to provide shared appreciation loans to help low- and moderate-income families achieve homeownership by assisting with down payments and closing costs.
The Dream for All Shared Appreciation Loan is a down payment assistance program that gives you a down payment to help you buy a home. Upon selling the property, you pay the down payment and a percentage of your equity if there was appreciation. It is provided to first-time homebuyers in conjunction with the Dream for All conventional first mortgages. Please note that this is a conventional loan, so you’ll be underwritten based on conventional guidelines, not FHA, VA, or USDA. The guidelines are more strict, with a hard cutoff at a 45% debt-to-income ratio, making it slightly more difficult to qualify than an FHA loan.
The Dream for All Share Depreciation Loan will give you up to 20% of the sales price or appraised value, meaning that if you’re buying a $500,000 home, they’ll gift you up to $100,000 for the down payment to help you buy the home. However, the homeowner agrees to repay the original loan down payment plus a share of the appreciation when you sell it or transfer the loan.
“The more people that buy homes using this program, the quicker the money will run out.”
For example, if you buy a $500,000 home and receive a $100,000 down payment, you’ll need to repay $100,000 when you sell the home, plus 10% of the appreciation. If the home appreciates to $600,000, you’ll need to pay an additional 10% on top of the original $100,000. If the home appreciates to $700,000, you’ll need to pay an additional $20,000, and so on. However, if the home does not appreciate, you don’t owe anything.
There are restrictions on this loan program, with the maximum loan amount set at $726,200, which yields an estimated purchase price of just over $907,000. Additionally, California has allotted $500 million towards this program, which may sound like a lot, but that’s for the entire state. Therefore, the more people buy homes using this program, the quicker the money will run out.
If you’re planning to buy a house and are considering this program, getting as much information as possible is vital. The program will launch in a couple of days, and the rates and fees are still unknown. If you’re curious to learn more about the program’s terms and qualifications, please call us at (916) 919-5775, and our local lender partner will provide all the necessary information.
If you have any questions about real estate or need help with your buying and selling goals, don’t hesitate to call or email us anytime. We’re always here to help.
