California First Time Homebuyer Down Payment Assistance Program 2024: All You Need to Know

If you are a first-time homebuyer in California planning to buy a house this year, you’re in luck. The California Housing Finance Agency recently announced the launch of a down payment assistance program called the Dream For All Shared Appreciation Loan to help with down payment and/or closing costs. The program is to be used in conjunction with the Dream For All Conventional First Mortgage and will be granted to homebuyers on a lottery basis, as opposed to a first-come first-served basis, in an attempt to have a more diverse and fair outcome.

How does the program work?

An estimated 1,700 – 2,000 qualified first-time homebuyers can receive up to $150,000 or 20% of the sales price or appraised value, whichever is less, through a lottery system that will run from early April to May.

Upon sale or transfer of the home, the homebuyer repays the original down payment loan, plus a share of the appreciation in the value of the home.

The term of the Shared Appreciation Loan matches the term of the CalHFA first mortgage not to exceed thirty (30) years. Payments on the Shared Appreciation Loan are deferred for the life of the first loan. Repayment of the principal and any share of the appreciation on the Shared Appreciation Loan shall be due and payable at the earliest of the following events:

Transfer of title
Sale of the property
Payoff of the first loan
Payoff of the subordinate loan principal balance
Refinance of the first loan – see Refinance and Re-subordination section
The formal filing and recording of a Notice of Default (unless rescinded)

This loan is not assumable.

Are there income limits?

Incomes may not exceed California Dream for All’s income limits, found here: https://www.calhfa.ca.gov/homeownership/limits/income/income-cadfa.pdf

Are there maximum DTIs and minim credit scores?

The program follows the Dream For All Conventional first mortgage guidelines for minimum credit score requirements and maximum total Debt to-Income ratio requirements, which, according to the CalHFA Conventional Loan Programs handbook, are the following:

The maximum total Debt-to-Income (DTI) ratio cannot exceed:

50.00%, for borrowers with credit scores greater than or equal to 700
45.00%, for borrowers with credit scores less than 700
- Also applies to lending on properties with Manufactured Homes MCC may not be used for credit qualifying purposes.

Minimum Credit Score

The minimum credit score is 680 for borrowers with income greater than the HomeReady 80% AMI LI income limit
The minimum credit score is 660 for borrowers with income less than or equal to HomeReady 80% AMI LI income limit • Borrower(s) with no credit score are not permitted
Non-traditional credit is not accepted
All borrowers must meet the minimum representative credit score requirement. The middle score of the lowest-scoring borrower should be used to determine eligibility
- If a tri-merged credit report is used, use the middle score
- If a merged credit report only returns two scores, use the lower score
- If a merged credit report only returns one score, that score must be used

Who’s Eligible?

The program is for first-time homebuyers purchasing an owner-occupied property anywhere in California.
Each buyer must:
- be a first-time homebuyer.
- be either a citizen or other National of the United States, or a “Qualified Alien” as defined at 8 U.S.C § 1641.
- meet credit, income and loan requirements of CalHFA’s first mortgage loan program, the CalHFA-approved lender, CalHFA’s Master Servicer, Lakeview Loan Servicing and the mortgage insurer, as applicable.
- At least one borrower must:
  - be a first-generation homebuyer
  - be a current California resident

Homebuyer Education Requirements

Per CalHFA Conventional Loan Programs Handbook, one occupying first-time homebuyer must complete:
- Online Homebuyer Education through eHome
- In-Person or Virtual Live Homebuyer Education through NeighborWorks America or through one of the HUD approved Housing Counseling Agencies
- Dream For All Shared Appreciation Supplemental Education: https://www.calhfadreamforall.com/

Who is considered a first-time homebuyer?

The CalHFA defines a first-time homebuyer as a borrower who has not had an ownership interest in any principal residence or resided in a home owned by a spouse during the past three years.

Who is considered a first-generation homebuyer?

A first-generation homebuyer is defined as a homebuyer who has not been on title, held an ownership interest or have been named on a mortgage to a home (on permanent foundation and owned land) in the United States in the last 7 years, and;
To the best of the homebuyer’s knowledge whose parents (biological or adoptive) do not have any present ownership interest in a home in the United States or if deceased whose parents did not have any ownership interest at the time of death in a home in the United States, or;
An individual who has at any time been placed in foster care or institutional care (type of out of home residential care for large groups of children by non-related caregivers).

What is an owner-occupied home?

All borrowers must occupy the property as their primary residence within sixty (60) days of closing.
Non-occupant co-borrowers are not allowed
Non-occupant co-signors are not allowed

Property Requirements

Property must meet the requirements of the applicable CalHFA first mortgage. Refer to the CalHFA Conventional Loans Program Handbook for full details.

What should I do now to prepare?

Talk to a CalHFA Approved Lender who is offering the Dream For All program.
Work with your loan officer to determine what you need to do to secure a California Dream For All (DFA) Lender Pre-Approval Letter. You’ll need this letter in order to register for a DFA voucher in April.