CalHFA Dream For All is coming back
Does this program truly help more people become homeowners?
by Alisa Johnson, January 2024
There is a question that has swirled around for a long time in my head.
Do down payment assistance programs really help get more buyers into homes? Would those buyers have been able to purchase without the assistance?
Last year when CalHFA released $25 million in funds for the CalHFA Dream for All program the funds were gone in less than 11 days. Did these funds actually go to first-time home buyers in need? Or did they get dispersed to just about anyone who applied in those first 11 days? I am not sure we will ever know the true answer to this but the program is on its way back but this time it has some adjustments to qualifications and a more controlled way to distribute funds.
Some of the qualifications for the new program release are as follows:
- At least one applicant must be a California resident
- At least one applicant must be a First-Generation Homebuyer – **this is a new requirement added with this release
- A homebuyer who has not been on title, held an ownership interest, or has been named on a mortgage to a home (on permanent foundation and owned land) in the United States in the last 7 years, and
- To the best of the homebuyer’s knowledge whose parents (biological or adoptive) do not have any present ownership interest in a home in the United States or if deceased whose parents did not have any ownership interest at the time of death in a home in the United States, or; PB.2023-03 Page 2 of 2 California Housing Finance Agency
- An individual who has at any time been placed in foster care or institutional care (type of out-of-home residential care for large groups of children by non-related caregivers)
- Income must be less than or equal to $178,000 in Nevada County, or $180,000 in Placer County
- Maximum Shared Appreciation Loan amount is $150,000 or $20% of the sales price or appraised value, whichever is less. – Shared appreciation loan can be used for down payment and closing expenses!
- Minimum Combined Loan-To-Value (CLTV) is 95.00%
- 2/1, 1/1, and 1/0 temporary buydowns are permitted
These programs are created with the vision in mind to help more people become homeowners.
The 1st $25 million(2023) did not have the same requirements and I fear that a lot of those funds helped people purchase homes with those funds that had other means to afford home ownership.
So will 2024 be a better use of CalHFA Dream for all funds?
I believe so. If you are paying rent and spending over $2500 a month in rent then home ownership might be a great option for you and down payment assistance might be a great boost to get you there.
Homeownership is costly and you should be prepared as it is likely the largest investment you will make in your lifetime.
Some things that you can start now to prepare to be a homeowner are as follows.
Budgeting-Create a household budget.
Savings-Create a savings plan to have 6 mortgage payments in savings for emergencies.
Research– Gather information from your RE agent, lender, etc on costs you will incur in the buying process.