When it rolled out last year, the California Dream for All program — a loan application for first-time home buyers — exhausted its approximately $300 million of funding within 11 days.
That prompted some changes this year for when the down payment assistance program opens again to California residents on April 3. The state has about $250 million on the table, which is expected to assist between 1,600–2,000 new applicants, said Eric Johnson, a spokesperson for the California Housing Finance Agency (CalHFA).
“The program is designed to help those who may not have had the benefit of generational wealth in buying their first home,” Johnson said.
If you’re hoping to apply for the California Dream for All program in 2024, keep reading to see who is eligible, how the program has changed this year, and what you need to do.
What is the California Dream For All program, and how does it work?
Under the California Dream For All program, the state will put down up to 20% of the cost of the home, or up to $150,000.
That money does have to be repaid, just not right away. It gets repaid — without interest — when you sell the home.
However, there’s a catch. You also have to pay back 20% of any appreciation on the home’s value (which is why the program is called a Shared Appreciation Loan). So, if you buy a $600,000 home and then sell it 10 years later for $700,000, you would have to pay back the initial $120,000 down payment, along with an additional $20,000. In December, the median price of homes in California was nearly $820,000, according to the California Association of Realtors.
“Basically, in return for an investment from the state into your down payment, when you sell the home, you should share that appreciation with the state,” Briones said, adding that the money homebuyers repay will go toward funding future California Dream for All loans.
“As an organization working to close the racial wealth gap we thought that trade-off is fair, to ensure that we can support families now and in the future.”
Who is eligible to apply for California Dream for All?
“Who’s eligible” is where some of the program’s changes this year come into play.
Like last year, California Dream for All applicants must be California residents — who are either citizens, permanent residents or otherwise defined as a “Qualified Alien” — and first-time home buyers.
But unlike last year, at least one person on the application must also be a first-generation home buyer — meaning their parents do not currently own a home in the United States. Applicants who have ever been in foster care also qualify.
Briones said he was skeptical at first about this requirement that applicants be first-generation home buyers. But, given how quickly the money flew out the door last year, he’s now in favor of the idea.
“I do think that this is probably a needed additional step to make sure that this program truly is targeted to people that really do need the funds,” he said.
Last year, residents making up to 150% of the area’s median income could apply. But this year, that threshold has been reduced to 120% of the area median income. Those income limits now range from $287,000 in Santa Clara County to $132,000 in some of the more rural or agricultural parts of the state, such as Humboldt and Fresno counties. Check out the full list of county income limits here (PDF).
Johnson said that CalHFA (California Housing Finance Agency) relies on the income the lender uses to qualify the homebuyers. So, if, for example, a married couple applies, then the lender uses their combined income. If a single person applies to the program, the lender only uses one income.
Applicants must also have a credit score of 680 and a debt-to-income ratio of no more than 45%. Read the full list of eligibility requirements for California Dream for All (PDF).
