Down payment assistance for first-time California home buyers relaunches with new lottery.
California is set to allocate an additional $250 million in down payment assistance to first-time homebuyers this spring. This move comes as the state makes adjustments to its program, which is designed to reach a more diverse group of borrowers across California.
Last year, the California Dream for All loan program, which offered homebuyers financial support, quickly exhausted its $300 million budget in just 11 days. While the program was highly popular, there were concerns from some Realtors and lenders. They observed that some recipients of the funds were already well into the process of buying a home, raising questions about whether the loans were going to those who could already afford homes.
In the upcoming round of the program the state will continue with its "shared appreciation" lending model. This means that first-time homebuyers will receive assistance towards their down payment, up to 20% of the purchase price or $150,000, whichever is lower. In return, the state will be repaid the loan amount along with a portion of the home's appreciation when it is sold in the future.
To prevent a rush for the loans, the California Housing Finance Agency, which oversees the Dream for All program, is replacing the original first-come, first-served approach with a lottery system. Homebuyers will have until April to find an approved lender and begin their application process. The lottery will open in early April, giving buyers a month to submit their applications. Around 1,700 to 2,000 fortunate lottery winners will receive vouchers that they can use within 60 days to purchase a home.
The extended timeline aims to assist Californians who are uncertain about their ability to buy a home without state assistance.
Eric Johnson, a spokesperson for CalHFA, mentioned that the program targets individuals with stable incomes, decent credit scores above 660, and the aspiration of homeownership. This extra time allows them to become motivated, seek out a loan officer, and work on improving their credit score or managing their debt-to-income ratio with the help of loan officers or brokers.
Californians interested in applying for the program can visit the California Dream for All website for updates or join CalHFA’s homebuyer email list.
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