California Dream For All - 1st Time Buyer Down Payment Assistance

Dream For All Shared Appreciation Loan Program

California has created a program, SB-197, to help first-time homebuyers achieve their dream of homeownership through shared appreciation and will provide 20% down payment assistance.

Read on to learn more about the program and eligibility.

What exactly is the California Dream For All program?

The California Dream For All Shared Appreciation Loan is a shared appreciation loan program that provides a loan for the down payment to qualified, first-time homebuyers. Upon sale or transfer of the home, the homebuyer repays the original down payment loan, plus a share of the appreciation in the value of the home.

The California Housing Finance Agency (CalHFA) will provide up to 20% of the purchase price for a Down Payment Assistance (DPA) loan. The DPA loan is a silent second and there is no monthly payment or interest accrued as long as the first mortgage remains in place. In lieu of interest, you agree to share a portion of the equity with CalHFA.

For example, you purchase a home for $500,000, CalHFA will give you $100,000 (which is 20% of the purchase price), for the down payment. You will not make any payments on the $100,000 loan.

How much equity will CalHFA take?

CalHFA is entitled to 15% or 20% of the appreciation gained since the date of purchase. The percentage of equity share depends on your income. The program guidelines state you will share 20% of the appreciation if your income is between 80% - 150% of your county's Area Median Income (AMI). If your income is less than 80% of your county's AMI, CalHFA will only be entitled to 15%.

What are the requirements?

• First-time homebuyers (you can't have owned a property in the last 3 years)

• Minimum credit score: 660

• Meet your county's CalHFA income limit

• 45% Maximum DTI (Debt-To-Income) ratio

• Single family home or condo; no multi-family properties

• Completion of CalHFA homebuyer education course

• One year home warranty

• Must occupy the property as your primary residence

What are the benefits?

• No down payment

• No PMI (Private Mortgage Insurance)

• Increased buying power

Important note: The CalFHA fund for this program is currently $300million, once this runs out the program will end unless more funds are added.

Update: As of 4/07/2023 the fund has been earmarked for purchases.

This means the $300 million has already been designated for specific purchases. Some homes may fall out of escrow, freeing up some funds for another lucky buyer. We have a feeling the fund may be replenished this summer as it was a very popular program. We'll keep you posted!

Source: CalHFA