Last spring, when the California Housing Finance Agency offered interest-free, no-monthly-payment loans to help low-income people come up with down payments and fees to buy their first homes, the entire nearly $300 million budget was wiped out. Ta.in just 11 days.
Lawmakers then put an additional $225 million into the program during last year's state budget negotiations, and CalHFA aims to award those funds this spring. But this time there will be no rush for cash. Instead of handing out loans on a first-come, first-served basis, the state would select eligible applicants through a lottery.
The program also has stricter requirements, requiring applicants not only to not be homeowners but also to have parents who are not current homeowners. The key is to focus the program more closely on Californians who need state aid most.
About 2,100 of the loans were disbursed before the funds ran out last April, CalHFA spokesman Eric Johnson said.Since then, California home sales have slumped due to rising interest rates. exceeded 7%.
Limited to covering the down payment and closing costs of your first home, the California Dream for All Shared Appreciation Loan can be up to $150,000 or 20% of the home purchase price, whichever is less. These are treated as second mortgages, but no payments of any kind are required until the home is refinanced, resold, or the first mortgage is paid off, at which point the state loan must be repaid in full. there is.
What makes this loan unique and attractive is that it does not accrue interest. Rather, the value of your home increases over time. When a Dream for All loan comes due, the borrower repays the principal amount plus a percentage of the increase in the value of the home equal to the percentage of the purchase price covered by the loan. If your home doesn't increase in value, nothing will be added to your Dream for All loan.
For example, if a Dream for All loan covers 18% of the purchase price and the borrower sells the home for $100,000 more than he paid, the borrower pays the Dream for All loan plus 18% of $100,000, or 18,000. I have to pay back the dollars. . A borrower with an income below 80% of the area median income pays a smaller percentage of the increase in value and receives additional benefits.
Would-be homeowners cannot apply for a loan yet, but can work with participating lenders to complete the documentation needed to obtain a loan. The program will begin accepting applications online in April, Johnson said.
Who can take advantage of the Dream for All loan?
To meet the definition of first-time, first-generation homeowner, a borrower must not have owned equity in a U.S. home in the past seven years. Also, their parents may not currently have equity in the home. If your parents are deceased, they may not have owned the home at the time of their death. The program is also open to Californians who have “previously been placed in foster care or residential care,” CalHFA said. Program manual.
If multiple buyers are involved, at least one must currently reside in California and at least one must be a first-generation homebuyer. Additionally, the borrower must be a U.S. citizen or a non-citizen authorized to reside in the United States, and must make the purchased home their primary residence within 60 days of purchase.
annual income limit Eligible borrowers have an income of 120% of the area median income, which varies by county. For example, it's $155,000 for a borrower in Los Angeles County, $202,000 in Orange County, and $195,000 in Ventura County.
How do I apply?
The first step, Johnson said, is to work with the lenders participating in the program. Pre-qualification letter. The lender's role is to check whether you qualify for the Dream for All program and does not necessarily guarantee that you will receive a loan. However, before issuing the letter, the lender will check your credit report and debt-to-income ratio to determine how much of a loan you are likely to qualify for, so make sure your financial situation is It becomes an element.
A list of lenders participating in the Dream for All program can be found at: CalHFA website.
The state plans to open an online portal in the first week of April for applicants to submit their pre-qualification letters, Johnson said. He said part of the reason for giving the public several months to prepare before filing an application is for people to improve their credit scores or take other steps necessary to obtain a pre-qualification letter. He said it was to give him time.
How are applicants selected?
Johnson said CalHFA will accept pre-qualification letters for about a month, and everyone will be treated equally regardless of when they arrive within that period. After reviewing the letter to ensure the applicant is eligible, the agency will conduct a lottery to select the borrower who will receive a Dream for All loan voucher.
The total budget for this program is enough to make approximately 1,670 loans of $150,000. Johnson said he expects the program to support 1,700 and 2,000 loans, as many borrowers take out small loans.
What happens after I receive my voucher?
Just because you're approved for a Dream for All loan doesn't mean you can buy a home. Still, you need to find a property for sale that you can afford, persuade the owner to make your bid, and qualify for a mortgage from a bank, credit union, or other lender.
However, with a voucher, you can make a larger down payment and lower your monthly mortgage payment.
