In this economy, who has enough money for a down payment on a house?The California Housing Finance Agency is poised to launch a scaled-down version of its new shared equity home loan program on March 27. With the Dream for All program, the state plans to provide $300 million worth of down payments for an estimated 2,300 first-time homebuyers.
Given the uncertainty, Gov. Gavin Newsom in January proposed a significantly smaller version of the 10-year, $10 billion program originally envisioned by Senate President Pro Tem Toni Atkins, a Democrat from San Diego. In his January budget, Newsom proposed spending an initial $300 million on the program, a cut from the $500 million compromise signed last year.
“With interest rates rising, the program is needed more than ever … and there are several innovative ways to fund the program,” Woods wrote.Atkins, who championed the equity sharing program last year, has said the Dream for All program is a priority. She said in a recent statement she isn’t giving up on getting more money for it.
California home prices, already rising for years, saw big gains during the pandemic, as mortgage interest rates hit historic lows and families sought more space for their remote work set-ups to practice social distancing. Given the rapid market changes, Tiena Johnson Hall, CalHFA’s executive director, called the governor’s reductions in Dream for All funding prudent at CalHFA’s January meeting. “There’s still a lot of room for values to continue to decrease, and that is what we expect to see,” she said.a revised $25 billion deficit in next year’s state budget. Since then, job growth nationally and in California has remained strong, except for layoffs in the tech sector.
The loans will cover as much as 20% of a home purchase. Whenever a home is sold, transferred or refinanced, a borrower will owe the state the original amount the state invested, plus a percentage of the home’s increase in value. If the original loan was 20 percent of a home’s value, the seller would owe the state the original loan plus 20 percent of its increased value, though that amount would be capped at 250% of the original loan amount.
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