First Time Homebuyers: Cal FHA – Dream for All Program

Dream For All Program

Cal FHA program is a great opportunity for first-time Home Buyers! CalHFA Dream For All Shared Appreciation Loan Program is a path-breaking program for California first-time homebuyers. A revolving, shared appreciation loan program that provides loans for a down payment to qualified homebuyers. Upon sale or transfer of the home, the homebuyer repays the original down payment loan plus a share of the Appreciation in the home’s value.

Max income limits for homebuyers

Santa Clara County $300k

Santa Cruz County $236k

Sacramento County $202k

Check out the income limit for all the counties at 2022 income limits

Dream For All Loan Program Overview

The Max purchase price is $1.361 in Bay Area
Minimum credit score 680*
0% interest on the down payment loan
30-year fixed rate loan only. Cal HFA determines interest rates
Be a first-time homebuyer
Occupy the property as a primary residence; non-occupant co-borrowers are not allowed.
CalHFA borrowers must complete two levels of homebuyer education counseling and obtain a certificate of completion through an eligible homebuyer counseling organization.
Must be buying a one-unit property (Single-Family, Townhomes, Approved Condominiums, and Manufactured Homes)

To learn more details, let’s talk with Amar REALTOR^®.

Features of Shared Appreciation Loan

Subordinate second mortgage

Down payment and closing cost assistance

Homebuyer does not make payments until they sell, refinance, or transfer the property.

Dream For All fund provides a loan for 20% of the home purchase price. — The homeowner pays back the original loan amount plus 20% of any appreciation in the home’s value.

Dream For All Shared Appreciation Loan

Eligible Borrowers

First-time homebuyers at or below CalHFA income limits

Paired with CalHFA’s first mortgage

DPA Level and Eligible Costs

Up to 20% of the home purchase price

Down payment assistance, nonrecurring closing costs, interest rate buy-downs

Loan Terms

Repayment upon resale, refinance, or transfer of the property

Appreciation is split between the homeowner and program on a pro-rata basis

Cap on total Appreciation equal to 2.5x the original shared appreciation loan amount

Equivalent to a full appreciation that would be paid over approximately 30 years at a 5 percent annual appreciation

Offers more certainty for borrowers and tempers the effect of major market upswings

Shared Appreciation Scenarios

Dream For All Shared Appreciation Loan Program works differently than a regular mortgage.

The program has two different Shared Appreciation Loan Terms, which are as follows:

Scenario 1: For borrowers with income above 80% AMI and less than or equal to the CalHFA Income Limits, there is a 1:1 program appreciation share which works as follows:

The Shared Appreciation Loan provides up to 20% down payment and shares up to 20% of the home price appreciation.

Example:
$500,000 (A): The original sales price / original appraised value of the subject property
$100,000 (B): 20% of the sales price the borrower receives as a Shared Appreciation Subordinate Loan. At the time of sale / refinance / other transfer, the property’s market value is $640,000.
$640,000 (C): market value of the property
$140,000: Appreciation of the property (C – A)
$28,000 (D): 20% of Appreciation of the property; hence, at the time of sale / refinance / other transfer, the borrower owes the following amount to CalHFA:
$100,000 (B) + $28,000 (D) = $128,000

Scenario 2: For borrowers with income less than or equal to 80% AMI, there is a reduced 0.75:1 program appreciation share which works as follows:

The Shared Appreciation loan provides up to 20% down payment and claims up to 15% of the home price appreciation

Example:
$500,000 (A): The original sales price / original appraised value of the subject property
$1,00,000 (B): 20% of the sales price that the borrower receives as a Shared Appreciation Subordinate Loan At the time of sale / refinance / other transfer, the property’s market value is $640,000.
$640,000 (C): market value of the property
$140,000: Appreciation of the property (C – A)
$28,000 (D): 20% of the Appreciation of the property
$21,000 (E): 0.75% of $40,000, Program Share of Appreciation Hence, at the time of sale / refinance / other transfer, the borrower owes the following amount to CalHFA:
$1,00,000 (B) + $21,000 (E) = $121,000