This spring, California will give $250 million more in down payment help to people buying their first home. The state will also make changes to its one-year-old program to reach a wider range of borrowers across the state.
Last year, in just 11 days, eager owners used up almost all of the $300 million set aside for the California Dream for All loan program. Even though the new program was a huge hit, some Realtors and lenders said that the clients who got the money were already well on their way to buying a home. This led to rumors that the loans might have gone to people who already had enough money to buy a home.
The next round of the program will use the same “shared appreciation” lending model. The state will give first-time homebuyers up to 20% of the purchase price or $150,000 toward a down payment. When the home is sold again, the state will get the loan back plus a share of the home’s appreciation.
The California Housing Finance Agency, which runs Dream for All, wants to avoid a mad rush for the loans this time by switching from the old “first-come, first-served” system to a raffle.
People who want to buy a house have until April to start working on an application and find a lender that is allowed by the state. The drawing starts in early April, and people who want to enter will have one month to do so. Lottery winners will get coupons worth between 1,700 and 2,000 dollars, which they can use to buy a home within 60 days.
Who will Benefit?
Supporters of Dream for All had thought that it would help people in communities that have been hurt by redlining or low homeownership rates, like Black and Latino Californians. According to a study by CalMatters of Dream for All’s first round, the people who got loans were more likely to be people of color than California’s current homeowners, but they were still whiter than the state’s total population.
Briones said that the fact that California law doesn’t allow state-sponsored affirmative action makes it hard for officials to come up with a program that will fix the problem of past redlining without directly addressing race.
As part of Dream for All’s new rules, at least one homebuyer must be a first-generation homebuyer. A first-generation homebuyer has never owned a home and neither did their parents. A foster carer is also a first-generation homeowner. The state has also dropped the income limit from 150% of the area median income to 120%. In Fresno County, this means making about $95,000 a year, and in Santa Clara County, it means making about $215,000.
In order to let people in Southern California and the Central Coast know about the program, Johnson said, the state is planning a campaign that will start in February. It will have text messages, flyers in laundromats, and ads on Spanish-language radio and in Black media.