Less than two weeks after its start, a $300 million state program offering down payment assistance to first-time California home buyers has been paused after applicants snapped up all the money.

The California Housing Finance Agency began the Dream for All Shared Appreciation Loan program on March 27. It was set to provide $300 million for loans that would cover down payments and/or closing costs for about 2,300 qualifying home buyers, in an effort to improve “equitable access to homeownership for all Californians,” the agency said in a news release announcing the program. 

In the Bay Area, the maximum income for applicants ranges from a low of $215,000 in Solano County to a statewide high of $300,000 in San Francisco, San Mateo, Santa Clara and Marin counties, according to agency documents.  

However, on Friday, the agency posted a notice on its website that said “funds for the California Dream for All Shared Appreciation Loan program have been reserved as of April 7, 2023,” along with a link to sign up for its newsletter to receive updates on the program.

The agency had posted a bulletin on its website a day before, on April 6, warning people it would pause the program once all loans were rate-locked by 3 p.m. April 12, or whenever available funds “become fully committed.”

Eric Johnson, a spokesperson for CalHFA, told The Chronicle on Monday that the agency’s lender network was able to lock about 2,500 borrowers for loans — about 19% of whom were from the Bay Area. The agency is not a direct lender and instead works with private loan officers.

“Although we did not spend money on advertising, there was strong word-of-mouth, and very quick uptake by lenders,” Johnson said. “Demand for this program was unprecedented.”

Some of the applications “may fall out, however, so a final number is at least 30-45 days out after all the loans are closed,” Johnson said.

Any additional funding for more assistance is “dependent on the California state budget process, a comprehensive negotiation between the Legislature and the administration which will play out in the coming months,” Johnson said.

Regardless of whether the state budget allocates additional money, Johnson said, the original $300 million will be “recycled,” meaning funds will become available as borrowers pay off their loans. The agency does not know when that might happen, he said, since it depends on when people decide to sell or refinance their homes.

Here’s a look at the program and how it works:

What is the Dream for All Shared Appreciation Loan program?

Down payments are a particularly high barrier to homeownership in California — especially in the Bay Area, which has some of the most expensive real estate in the country. To help first-time buyers get their foot in the door, the program provides money for a down payment and/or closing costs equaling 20% of the property’s purchase price.

The funds are in the form of a shared appreciation loan, which is interest-free and repaid by the buyer when they sell or transfer the home, with a percentage of the appreciation in the value of the home shared with the lender. 

Borrowers do not need to make monthly payments on the loan. “Payments are deferred for the life of the first mortgage,” the agency wrote in an FAQ about the program.

Repayment is capped at a maximum 2.5 times the amount of the original loan. If the property’s value does not appreciate or declines, no extra money is due. 

CalHFA is not a direct lender, officials said. Instead, buyers must find a CalHFA-approved and -trained loan officer in their area to apply for the program. The agency’s website offers a lookup tool for borrowers to find a loan officer near them. 

All CalHFA borrowers must complete a home buyer education and counseling course, and program applicants must take a free online class specifically for shared appreciation loans.


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