June 16, 2024

California’s Home Loan Program Implements Lottery System for Equity in Distribution

Changes to Shared Appreciation Loan Program Aim to Increase Accessibility

By Keemia Zhang

The California Dream For All Shared Appreciation loan program is set to relaunch with new changes in order to reach more and diverse potential buyers. 

The program, which helps low-income Californians acquire no-interest, no-monthly-payment loans, ran out of its almost $300 million budget 11 days after its launch with 2,1000 loans. 20% of the loans went to Sacramento County residents, with just 9% going to Los Angeles home buyers. 

Following reports that select recipients were already in advanced stages of the home-buying process and likely could afford homes by themselves, The California Housing Finance Agency (CalHFA) will now offer loans to qualified applicants based on a lottery system.

Eligibility changes implemented into the program include a new income limit – now 120% of the Area Median Income – and the requirement that potential home-buyers must not have parents who own homes as well. The loans cover down payment and closing costs on first homes, offering a maximum of either $150,000 or 20% of the home’s price, depending on which is a lesser value. 

​​Eric Johnson, a spokesperson for CalHFA, stated that the agency “wants to ensure that this round of funding is distributed as equitably as possible and to make sure that there is plenty of time for potential homebuyers to learn about the program, work with a mortgage professional, and submit their applications.”

The lottery runs from early April to May and will select 1,700-2,000 recipients to receive a loan voucher. Vouchers will be set aside for each of the state’s regions, consistent with the amount of home-buyers in each area. Borrowers whose incomes are 80% or less of the area median income pay a lesser percentage of the value increase. The state loan has no mandated payments until the home is refinanced, sold, or has paid off a first mortgage.  

Successful recipients of the program repay their original down payment without interest, as well as part of the property’s appreciated value if they decide to sell.

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