If you’re looking to buy a home in the State of California and you’re a first-time homebuyer, and you don’t have 20% down or a very small down payment, this program could be a game changer for you and your family. Here’s how the program works, and how you can benefit from a financial standpoint as it relates to buying a home to live in…

On March 27, 2023. The State of California announced the California Dream Cal HFA shared appreciation program. Anyone who is a first-time home buyer is eligible. A first-time homebuyer is someone who has not owned a primary residence in the last three years is eligible. As a result, this program gives you 20% down to purchase a home.

Under this program:

• 20% down conventional loan- 20% provided by the State of CA
• No Private mortgage insurance
• No interest paid on the 20% down
• Up to 6% seller paid credits for closing costs, ok

This program allows you to purchase a home with the benefit of having 20% down without having 20% down. For example, let’s say you were previously preapproved, and you were working with a small down payment say around 5% and your maximum purchase price with 5% down was $600,000. Using this program your new purchasing power is probably somewhere around $725,000.

Effectively, you can buy a house with this program with a seller-paid credit for closing costs and not using any of your own funds. If you put an earnest money deposit when writing your real estate purchase transaction, these monies will get refunded back to you. This program allows you to obtain 100% financing without having any monthly PMI, which is a large financial boost to your purchasing power as a relates to your home search.

This program has some very strong and attractive financial benefits. The state requires you to pay back the 20% with shared home appreciation. This does not mean you cannot refinance and this does not mean that you are put in golden handcuffs by any stretch of the beans as there is also no prepayment penalty in this scenario either. So, for example, if you buy that house today for $600,000 it’s reasonable that you’re probably going to need to keep the home and probably be in a position to refinance down the line within a couple of years most likely, depending on the area and the market in California in which you were in.

The program will do first mortgages up to the maximum high balance loan limit in the area in which the home is located. For example, in Sonoma County, California this program will go to a loan amount of $861,300, and this area has income limits of up to 220k a year which supports a home purchase up to the $1millon range.

So if you’re looking to get prequalified for this program or want to know more, about how this program can help you and your family, start a no-cost quote now.