*First-Gen homebuyer have a problem. With that said, according to the California Association of Realtors 2023 buyer snapshot, 36% of homebuyers were first-time buyers. However, only 3% of homebuyers were African Americans. Nationally, as of last year, the homeownership rate for Black households was 45.9%. This figure is 28.6 percentage points lower than the rate for Whites, at 74.4%.
Historically in America, homeownership has been one of the pillars for building generational wealth. That fact has led some advocates in California to argue that the alarmingly low home purchasing rates for Blacks signify a need to develop more programs and opportunities to expand access to home loans and down payments.
To that end, the California Housing Finance Agency (CalHFA) is rolling out the California Dream for All Shared Appreciation Loan Program for qualified Californians. The program is specifically focused on including first-generation homebuyers in traditionally underserved communities.
“There are so many people in California that have a good income, who have good jobs, credit, all that, but haven’t been able to save up for a down payment,” said Eric Johnson, Information Officer for CalHFA Marketing and Communications Division during a news briefing on the subject hosted by Ethnic Media Services.
“Also, they haven’t had the benefit of that intergenerational wealth. Having parents — if your parents were able to buy a home or your grandparents, even — being able to pass that down. So many members of the Black, Asian American, Latino and Native communities have not had that advantage. So, a lot of them are first-generation home buyers, the first people in their own families who were able to buy homes. So that’s what we’re really trying to do with this program.”
The program is offering qualified applicants a loan of up to 20% of the purchase price or $150,000, whichever is less. For example, if a buyer is interested in a $600,000 house, CalHFA may offer them a loan of up to $120,000. It will bring down the amount of their first mortgage from $600,000 to about $480,000, which would significantly reduce monthly payments.
“Another important thing about that 20% number is a lot of times it will make it so you do not have to pay mortgage insurance on your loan, which can add a pretty hefty amount to your mortgage payment every month,” said Johnson. “Now you do have to pay that 20%. You do have to pay it back when you sell or refinance the home. And what’s going to happen is you pay back that original amount plus 20% of whatever you have gained in the sale of the home.”
Funds received from homes sold or refinanced will go towards funding the next round of applicants. The first round of loans issued in April 2023 helped about 2,000 home buyers. With an additional $250 million in funding from the California Legislature, CalHFA is trying to help another 1,600 to 2000 homebuyers in the second round of the program. There are stipulations on the funding received by the Legislature that add emphasis to aiding first-time minority homebuyers.
Here are some qualifications for applicants:
- You must be a first-time home buyer.
- At least one person on the loan has to be a California resident.
- Your parents cannot currently own a home or at the time of their passing if deceased.
- If you were ever in the foster care system you can be part of the program.
- Income limit of $150,000 in Los Angeles County, $185,000 in San Diego, $234,000 in Alameda County
- You must have a credit approval letter from a partnered lender listed on the CalHFA website.
- You must submit your application between April 3 and April 29.
Qualified applicants will be entered into a lottery. Names will be drawn digitally and those selected to receive the voucher will be notified. People selected can use the vouchers with the backing of one of CalHFA’s approved lenders. Recipients would be allowed 90 days to find a home and to use the $150,000 towards the mortgage.
Watch the video immediately above to get additional information about the program and how to apply or learn more about the qualifications for and the partnering lenders who can aid you with the application process.
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