First-time California homebuyer hopefuls will get another shot at a state-sponsored loan after funding was restored for the popular program, said officials.
The zero-interest loans offered by the California Housing Finance Agency (CalHFA) were supposed to cover up to 20% of down payments on properties for some 2,300 qualified applicants. But less than two weeks after the California Dream for All program was announced March 27, officials put it on pause after it was inundated with applications. The loans were especially attractive because they required no monthly payments.
Officials effectively halted the program, which was supposed to be funded by $500 million lawmakers had put aside in the 2022-2023 state budget, but a fiscal shortfall prompted officials to cut it to $300 million. Now, as part of an agreement between lawmakers and Gov. Gavin Newsom struck late last month, the program is set to regain the lost $200 million in funding for the next fiscal year.
“The 2023-24 State Budget agreement leaves unchanged the allocation to CalHFA for the CA Dream for All program in the 2022 Budget Act, with $200 million remaining available for the program,” the agency said in a press release.
However, although the funds have been restored, there is no timetable for when the pause on the loan program will be lifted, according to Eric Johnson, a spokesperson for the agency.
“There is no date scheduled yet for the California Dream for All shared appreciation loan program to resume,” Johnson said in an email to The Standard. He said the agency was working to update the program “to respond to current market conditions.”
The loan is a “shared appreciation loan,” according to the program guidelines, which means that when borrowers pay it back, they must also pay a percentage of the homes’ growth in value—between 15%-20%, depending on their income levels and initial amounts borrowed.
According to Johnson, although the Dream for All program remains paused, the state offers other options for Californians in need of down-payment assistance.
For example, he said, the agency's MyHome program provides up to 3.5% of a home's purchase price as a silent second mortgage.