California Dream for All Shared Appreciation Loans: How to Apply and Qualify for the Program

California’s First-Time Homebuyer Assistance Program Sees Overwhelming Demand

In a surprising turn of events, the California Housing Finance Agency’s no-interest, no-monthly-payment loans for lower-income residents looking to buy their first home were completely depleted in just 11 days earlier this year. The initial budget of nearly $300 million was quickly snapped up by eager applicants, prompting lawmakers to allocate an additional $225 million to the program during last year’s state budget negotiations.

However, this time around, the process will be different. Instead of a first-come, first-served basis, the state will now select qualified applicants through a lottery system. The program has also implemented stricter requirements, including the stipulation that applicants must not only be non-homeowners but also have parents who are not currently homeowners.

The California Dream for All Shared Appreciation Loans, which max out at $150,000 or 20% of the home’s purchase price, offer a unique opportunity for aspiring homeowners. These loans do not accrue interest but instead increase in value over time with the value of the home. When the loan comes due, borrowers repay the principal plus a percentage of the increase in the home’s value that matches the percentage of the purchase price covered by the loan.

To qualify for a Dream for All loan, applicants must meet certain criteria, including being a first-time, first-generation homeowner and having an income below 120% of the area median income. The program is also open to Californians who have been placed in foster care or institutional care at any time.

Aspiring homeowners can begin working with participating lenders on the necessary paperwork to obtain a prequalification letter. The state will open an online portal in April for applicants to submit their prequalification letters, with a lottery to select recipients of the Dream for All loans to follow.

While the demand for these loans remains high, the program aims to support between 1,700 and 2,000 loans with the allocated budget. With the opportunity to make a substantial down payment, recipients of the Dream for All loans will be one step closer to achieving their dream of homeownership in California.