California’s Shared Appreciation Loan Program for First-Time Home Buyers Runs Out of Funds
If you’re a first-time home buyer in California, you may have heard of the California Dream for All Shared Appreciation loan program, which promised free cash from the state to help you buy your first home. Unfortunately, the program has already run out of funds due to a fiscal shortfall.
Launched by the California Housing Finance Agency (CalHFA) just two weeks ago, the program offered qualified first-time buyers up to 20% of the purchase price of a house or condominium. However, the program was only available to households earning below CalHFA’s income limit, which is $180,000 in Los Angeles County and $235,000 in Orange County.
Initially, the state had set aside $500 million for the program as part of the 2022-23 budget, but a fiscal shortfall led Gov. Gavin Newsom to propose a 40% cut, leaving only $300 million allocated for the program. As a result, the funds have already been reserved, and interested buyers will need to wait until more funds become available.
The California Dream for All Shared Appreciation loan program is unique in terms of both its structure and the type of loan issued. The loan, which can be used for a down payment and closing costs, is structured as a second mortgage, which means it isn’t repaid month by month and doesn’t accrue interest. Instead, borrowers pay back the original loan amount plus 20% of the increase in the home’s value when the mortgage is refinanced or the house is sold again.
To receive a loan, borrowers must complete a home buyer education and counseling course, as well as a free online course specifically for shared appreciation loans. The program is designed to replenish itself through revolving loans, meaning that when a borrower repays the loan, the money can be loaned again to a new borrower.
If you’re interested in the program and want to be alerted when it starts up again, you can sign up for CalHFA updates on the agency’s website. In the meantime, it’s worth noting that the program is still available for those who have reserved funds.
In conclusion, the California Dream for All Shared Appreciation loan program offered a unique opportunity for first-time home buyers in California, but the program has already run out of funds due to a fiscal shortfall. Although interested buyers will need to wait until more funds become available, the program’s structure and revolving loans make it a valuable option for those looking to buy their first home in the future.