California opens applications for program helping first-time homebuyers with down payments

Many people in California consider buying a house a challenging task, and one of the biggest hurdles to homeownership is saving for a down payment.

A California down payment assistance program — known as “Dream for All” — is once again accepting applications.

The program offers people assistance of up to 20% of the purchase price of a home, which can be used toward a down payment or closing costs.

“I’m the primary breadwinner for a family of three, and I would not have been able to purchase a home without the program,” Cheryl Jenkins, a recipient from the program's first round, said.

California Dream for All is a shared equity program. When a buyer eventually sells their home, they will pay back the original loan, plus somewhere between 15-20% of any appreciation of the home's value.

Housing industry experts stress the need for more homebuying assistance programs.

“We absolutely need more programs like this in the future. If anything, again, it is incredibly challenging for the average person in San Diego to save up that much money,” realtor Destiny Roxas said.

This year, recipients will be chosen by a lottery drawing. Loan vouchers for the program will be awarded in May.

How does the 'Dream for All' program work?

The program offers first-time homebuyers in California a shared appreciation loan of up to 20% of the cost of the home. 

If you’re buying a $500,000 home, you’d receive 20%, or $100,000, to help with a downpayment and closing costs.

Once the homebuyer sells their home at a later date, they would be required to pay back the 20% assistance, plus 20% of the home’s appreciation. 

If your $500,000 home sells in five years for $700,000, you’d owe 20% of $200,000 appreciation — or $40,000, in addition to the original loan. 

If you sell your home and it hasn’t grown in value, you’d only pay back the original 20% loan, according to the California Housing Authority.

The first phase of the program helped 2,182 first-time homebuyers purchase a home, according to the California Housing Finance Agency.

Who is Eligible? 

This program is open to first-time homebuyers in California — meaning you’ve never owned a home. A first-time homebuyer is also someone who owned a home three or more years ago and sold it, according to the CalHFA.

At least one borrower must also be a first-generation homebuyer and the buyers must plan to live in the new property they are buying. 

The program does not allow for non-occupant co-borrowers or co-signers. 

In addition to being a first-time homebuyer, borrowers must meet income requirements depending on their county. See the CalHFA Income Limits here.

How To Apply for the Dream For All Shared Appreciation Loan

The program is offered through private loan officers, according to CalHFA. Prospective buyers must secure a lender pre-approval letter, take a one-hour California Dream for All education course and complete a shared application. Full details here.