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 changes for when the down payment assistance program opens again to California residents this year on April 3. The state has about $250 million to allocate, which is expected to assist between 1,600 – 2,000 new applicants, according to Eric Johnson, a spokesperson for the California Housing Finance Agency (CalHFA).
The program – officially called the California Dream for All Shared Appreciation Loan – is designed to have the state step into the role of a parent or grandparent in assisting their offspring to buy a home.
“The program is designed to help those who may not’ve 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’s eligible, how the program has changed this year, and what you need to do.
Who got the money in 2023?
While wildly popular, the California Dream for All program didn’t have the geographic reach it had been designed for – nor did it reach its intended demographic target, said Adam Briones, the CEO of California Community Builders, a nonprofit housing research and advocacy organization.
Briones and his team researched designing the program to close the racial homeownership gap in the state. In California, nearly 37% of Black households own their homes, compared to 63% of white households, according to the Public Policy Institute of California.
“The original hope of the program had been formerly redlined communities, low-wealth communities … [would] be disproportionately supported by this program,” Briones said, “because they’ve been disproportionately held back by inequalities, both in terms of public policy and the way our economic system works.”
The first round of California Dream for All funding helped nearly 2,200 new homeowners purchase homes. But of those, only 3% of the grantees were Black, according to CalHFA. That’s compared to 35% White recipients, 33% Latino and 19% Asian American and Pacific Islander.
The California Dream for All funds also weren’t distributed equally on a geographic basis, Briones said, with a disproportionate share going to Sacramento residents.
This time around, changes to the 2024 California Dream for All program are meant to address those disparities. Here’s what you need to know to apply.
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. The down payment money does have to be repaid, just not right away. It gets repaid – without interest – when you sell the home.
However, there’s another stipulation. You also have to pay back 20% of any appreciation on the home’s value (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.
Who’s eligible to apply for California Dream for All?
Eligibility is where some of the changes to the program come this year. Like last year, California Dream for All applicants must be California residents – 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 don’t currently own a home in the United States. Applicants who’ve ever been in foster care also qualify.
Last year, residents making up to 150% of the area’s median income could apply. But this year, the threshold has been reduced to 120% of the area’s 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.
CalHFA (California Housing Finance Agency) relies on the income the lender uses to qualify 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%.
I think I qualify for the California Dream for All program. What’s next?
Don’t start picking out your dream home just yet – the first thing to do is to find a CalHFA-approved lender who’s offering the California Dream for All, and get preapproved. This is because you’ll need a preapproval letter from the lender to register for the program.
“Figure out how much home you can qualify for,” Johnson said. “Then work with a loan officer to make sure your application is ready.”
The online application portal will open at 8am on April 3 and will remain open until 5pm on April 29.
After, you’ll need to take a five- to six-hour home-buyer education course and a second one-hour course about how a shared appreciation mortgage works. The classes are online and free.
If you do end up getting selected for a loan under the program, you then have 90 days to find your dream house, enter into a contract to purchase a home and have the lender reserve the loan through CalHFA’s Mortgage Access System.
If you aren’t quite ready to talk to a loan officer yet, talk to a free HUD-approved housing counselor, who can dig into your finances and figure out what you need to do to get ready to buy a home.
What happens after I apply for California Dream for All?
This is another way the 2024 application differs from last year’s: Unlike 2023’s first round of funding, when loans were given on a first-come, first-served basis, this year, there will be a lottery.
This means you don’t need to worry about getting your application in right when the program opens.
How to apply
- Talk with a HUD-approved housing counselor
- Get a pre-approval letter
- Register when the program lottery opens in April
The state has been separated into nine geographic zones. The number of applicants selected for the California Dream for All loans will be based on the number of households in each zone.
And, if it doesn’t happen this year, you might also qualify for some of the state’s other home-buyer-assistance programs.
For more information on the program, visit the California Housing Finance Agency.