CalHFA - "Dream For All" Provides a 20% Interest-Free Down payment to Help You Achieve your Dream of Homeownership

(As of April 7, 2023) CalHFA, the California Housing Finance Agency, has announced that its Dream For All Shared Appreciation Loan program's fund have been reserved. Today is the last day to complete locking in the rates, or when the funds are fully committed. Otherwise, the loan files will not be funded.

Moreover, CalHFA recognizes that some homebuyers are facing delays with the Homebuyer Education requirement's one-on-one counseling portion. To solve this issue, CalHFA has collaborated with eHome America and added more than a dozen additional housing counselors. They have also prioritized appointments based on the closing date to speed up the process.

The California Housing Finance Agency (CalHFA) has announced the introduction of the Dream For All Shared Appreciation Loan. The Shared Appreciation Loan is a down payment assistance program for first-time homebuyers that will be available on Monday, March 27, 2023.

What is the Dream For All Shared Appreciation Loan?
The Dream For All Shared Appreciation Loan is a down payment assistance program designed to help first-time homebuyers with down payment and/or closing costs. (20% maximum assistance taht can be used for the down payment or it can be split to cover the down payment and closing costs.)The program will be used in conjunction with the Dream For All Conventional first mortgage.

What we know so far is this is going to be a NO INTEREST LOAN on the 20% assistance and it is also non-forgivable loan. But you will be required to pay it back once you sell the home or refinance in the future. And there will be an equity share agreement.

What are the triggers for repayment of assistance funds?
- Refinance
- Sale of the house
- Completion of the 30-year term on the mortgage

Who are qualified?

• First time homebuyer (anyone who hasn’t owned a home in the last 3 years)
• Minimum Credit Score: 660
• Maximum Debt-to-Income Ratio: 45%
• Property Type: Single-family, One-unit residences or Condo and properties with ADUS
• Min/Max CLTV:  70%/105%
• Non-occupied co-signers not allowed
• Cannot Exceed County Income Limit
• CalHFA homebuyer education course required
• One year home warranty required
• Cannot be combined with CalPLUS ZIP or MyHome Assistance

How does the Shared Appreciation Loan work?
The Dream For All program provides a loan for 20% of the home purchase price regardless of the income bracket. BUT the Shared Appreciation Loan works differently depending on the borrower's income.  

1. If the borrower has an income between 80% and 150% AMI using the HomeReady® Lookup Tool, the borrower must repay the original loan amount plus 20% of any appreciation in the value of the home upon sale or transfer of the home.
   
   For instance, suppose the borrower received a Shared Appreciation Loan of $50,000, and the value of the home increased by $100,000 over the years. In that case, the borrower would repay the original loan amount of $50,000 plus 20% of the appreciation, which amounts to $20,000. The total repayment amount would be $70,000.
   
   
2. If the borrower has an income between 80% and 150% AMI using the HomeReady® Lookup Tool, the borrower must repay the original loan amount plus 15% of any appreciation in the value of the home upon sale or transfer of the home. 
   
   Let's use the same example as number 1. Suppose the borrower received a Shared Appreciation Loan of $50,000, and the value of the home increased by $100,000 over the years. In this case, the borrower would repay the original loan amount of $50,000 plus 15% of the appreciation, which amounts to $15,000. The total repayment amount would be $65,000.
   
   

By reducing the program appreciation share and requiring a smaller percentage of appreciation to be repaid, the program ensures equitable access to homeownership and intergenerational wealth-building opportunities for all Californians.

Should I be worried if the shared appreciation increases so much?
The amount of the shared appreciation is capped at 2.5 times the original principal amount.

Example:
o Original Shared Appreciation Loan = $50,000
o Original loan amount times 2.5 = $125,000
o Maximum amount due at time of payoff = $175,000 (maximum appreciation plus original loan amount)

When will the Dream For All Conventional and Dream For All Shared Appreciation Loan Handbooks, Disclosure Statement, and Note be available?
The Dream For All Conventional and Dream For All Shared Appreciation Loan Handbooks, Disclosure Statement, and Note will be available on the CalHFA website on March 27, 2023. All program details, including eligibility requirements and application procedures, will be included in the handbooks.

Conclusion
The Dream For All Shared Appreciation Loan is an exciting development for first-time homebuyers in California. With this program, CalHFA aims to improve equitable access to homeownership for all Californians by providing down payment assistance. If you are a first-time homebuyer and meet the eligibility requirements, you can take advantage of this program to make homeownership more affordable. Make sure to visit the CalHFA website on March 27, 2023, to learn more about the program and apply.

County Income Limits
The Dream For All Shared Appreciation Loan follows an income limit per county. Check below to see what your County's limit is!