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In summary
State officials hope a lottery and an emphasis on first-generation homebuyers will make California’s most generous down payment assistance program more equitable.
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California will dole out $250 million more in down payment assistance to first-time homebuyers this spring, while making changes to its 1-year-old program aimed at reaching a more diverse group of borrowers across the state.
Last year frenzied homebuyers hoovered up nearly all $300 million budgeted for the California Dream for All loan program in just 11 days. While the new program was wildly popular, some realtors and lenders reported that clients who received the funds were already far along in the home purchase process, fueling speculation about whether the loans were going to people who already could afford to buy homes.
The program’s next round, launching today, keeps the same “shared appreciation” lending model: The state will give first-time homebuyers money towards a down payment — up to 20% of the purchase price or $150,000, whichever is lower — then it will get paid back the loan plus a share of the home’s appreciation whenever it sells again.
the second-lowest home ownership rate of any state, behind New York.
Who will benefit?
Dream for All’s backers had hoped it would especially benefit members of communities that have experienced redlining or low homeownership rates, such as Black and Latino Californians. A CalMatters analysis of Dream for All’s first round found that its beneficiaries included a higher share of people of color than exists among California’s current homeowners, but they were still whiter than the state’s overall population.
California law prohibits state-sponsored affirmative action, which poses a challenge for officials trying to design a program that tackles historical redlining without explicitly addressing race, Briones said.
California Dream for All’s new rules include a requirement that at least one homebuyer in each transaction be a first-generation homebuyer, defined as someone who has never owned a home and whose parents also did not own a home, or someone who grew up in foster care. The state also has lowered the income eligibility threshold from 150% of the area median income to 120%, a number that ranges from about $95,000 a year in Fresno County to about $215,000 in Santa Clara County.
The state plans an outreach campaign beginning in February that will focus especially on Southern California and the Central Coast to let potential homebuyers know about the program, Johnson said. It will include flyers in laundromats, text messages and advertisements on Spanish-language radio and in Black newspapers.
Colette Washington, a realtor in Oakland, said that about a quarter of her clients are first-time homebuyers and she tried to encourage them to apply for California Dream for All last year. But most were confused by the program and procrastinated, she said, and the money ran out before any of them successfully applied.
Buying a house “is probably the biggest financial commitment most average folks will make in a lifetime and so it’s intimidating,” she said. “Fear is paralyzing.”
This time around, she said, “I personally would like to see the people who really need the money get it first.”
How to apply for Dream for All
So far California Dream for All has survived Gov. Newsom’s budget ax, which fell on some of the state’s other housing programs last week, as the governor proposed clawbacks of unspent funds to solve a budget deficit his office projects will reach $38 billion in 2024-25.
Created in 2022, Dream for All was originally envisioned as a 10-year, $10 billion investment before lawmakers scaled it back last year.
Californians interested in applying for the program can visit the California Dream for All website for updates or join CalHFA’s homebuyer email list.
Johnson had one other piece of advice for wannabe homeowners in the state: “Most importantly, don’t give up hope. There is a possibility of owning your own home in California.”
Source: calmatters.org