Buying a home in California is no easy task, but a new state program launched Monday for first-time home buyers aims to make the process a little easier.
The California Dream For All program offers buyers financial assistance equal to 20% of the purchase price of a home.
These funds can be used for a down payment and closing costs when you buy your first home.
How does the California Dream For All program work?
The program offers first-time home buyers in California a shared appreciation loan of up to 20% of the cost of the home.
If you buy a $500,000 home, you’ll receive 20%, or $100,000, to help pay for the down payment and closing costs.
Once the buyer sells their home at a later date, they will have to repay 20% of the assistance, plus 20% of the home’s appreciation.
If your $500,000 home sells in five years for $700,000, you will owe 20% of the $200,000 appreciation, or $40,000, in addition to the original loan.
If you sell your home and its value hasn’t increased, you’ll only pay off the original 20% loan, according to the California Housing Finance Authority.
Who is eligible?
This program is open to first-time home buyers in California, which means you have never owned a home. A first-time home buyer is also someone who owned a home three or more years ago and sold it, according to CalHFA.
Borrowers must also plan to live in the new property they are buying.
In addition to being a first-time home buyer, borrowers must meet income requirements based on their county.
In Los Angeles County, borrowers must earn less than $180,000 per year. The limits vary depending on which California county you live in, but range from $159,000 to $300,000. (To check your county’s income limit, click here)
How to Apply for a Dream For All Shared Thank You Loan
The program is offered by private loan officers, according to CalHFA.
How much money is available?
The state has allocated about $300 million to the California Dream For All program, according to the State Treasurer Fiona Ma. This will provide assistance to approximately 2,300 California homebuyers.