The California Dream for All (DFA) homebuyer assistance program is a shared appreciation down payment assistance program that provides 20% down payment of assistance, in the form of a silent second loan, to qualified first time buyers. Assistance can be used to pay down payment and/or closing costs.

The DFA home loan and assistance program is another example of how the state of California is helping homebuyers gain access to affordable financing, increase homeownership, and creating generational wealth.

Benefits of the California Dream For All Assistance Program:

• Lower interest rate than other assistance programs.
• Lower monthly payment because you avoid paying private mortgage insurance (PMI).
• Lower monthly payment due to lower loan amount.
• Increased buying power due to larger down payment and lower rate & payment.
• No monthly repayment of the subordinate silent 2nd assistance loan.
• Homeowner doesn’t repay until they sell, refinance or transfer the property.

Repayment of the Dream For All Assistance Loan

Upon sale, transfer of the home, or if the borrower refinances, the homebuyer will repay the original down payment loan, plus a share or percentage of the home appreciation. The silent second DFA loan does not accrue interest…..it is 0%.

Ability to Refinance
You will be able to refinance and re-subordinate the DFA shared appreciation loan in order to reduce your interest rate and payment just ONE TIME without being required to repay the DFA loan.

What does Shared Appreciation Mean?

It’s not a bad thing. Shared appreciation just means that since the California State Housing Finance Agency is investing (partnering) in your ability to purchase a home that will build generational wealth for you, that you will split or share a small percentage of the increase in the value of the home when you sell, transfer ownership, or refinance.

How Much Appreciation is ‘Split or ‘Shared’?
The percentage of appreciation that is split or shared with the state housing authority when you sell, refinance or transfer your home depends on what your income is.
80%/20% Split = Borrowers with income between 80% to 150% of the AMI (moderate income) keep 80% of the home appreciation. The state receives 20%.
85%/15% Split = Borrowers with income under 80% AMI. (This is almost no one) keep 85% of the home appreciation. The state receives 15%. Search AMI income here.
** Shared Appreciation Cap = Appreciation is capped at 2.5 times the original principle loan amount.

Below is what a $500,000 purchase might look like if a moderate income (AMI 80-150%) homeowners sells their home for $700,000 or refinances and it appraises for $700K.

Dream For All Eligibility & Qualifying Criteria:

• First time homebuyer (anyone who hasn’t owned a home in the last 3 years)
• Minimum Credit Score & DTI ratio:
  • 45% DTI with 680 – 699 FICO score
  • 50% DTI with 700+ FICO score
  • 45% DTI with 660 up FICO score (income below 80% AMI)
• Property Type: SFR / Condo / Manufactured
• Max CLTV:  between 70% to 105%
• Non-occupied co-signers not allowed
• Cannot Exceed County Income Limit
• Two step CalHFA homebuyer education course required
• One year home warranty required
• Must be used with CalHFA DFA Conventional 1st loan
• Cannot be combined with other programs

Frequently Asked Questions (FAQ’s)
Do I have to make payments on the 20% silent second DFA loan?
– No, payments are deferred for the life of the loan (30 years) and the interest rate is 0%.

Can I combine other assistance programs with the Dream For All Shared Appreciation Loan program?
– Yes, but they have to comply with Fannie Mae Community Second guidelines and subordinate to the Shared Appreciation loan. Problem is not many programs willing to do that.

Can the Dream For All Shared Appreciation Assistance loan be used for both down payment and closing costs?
– Yes

What happens if my home does not appreciate in value or actually goes down in value?
– If the home value goes down or does not appreciate by the time you sell, then nothing happens because there is no appreciation to split or share. That is the risk the state of California is taking by partnering with you in this Dream For All homebuyer program. It’s important to know that regardless if the home appreciates in value or even goes down when you sell, the 20% silent second dream appreciation loan will be due and payable.

Can I move out and convert the home to an investment or rental property?
– No. CalHFA will require you pay the Dream For All Shared Appreciation loan off when you move out.

Get the Facts & Know Your Options
Do you have questions like this?
– Are there other homebuyer assistance options you should consider?
– Which assistance program is the best?
– Which program provides the lowest rate and/or lowest payment?
– Which assistance program will help you qualify for more?
This is what I do. I help you figure all this out AND get you preapproved for the homebuyer assistance program that you think is best for you.
Most lenders you speak to have no clue what assistance programs are available to you and/or they are unable to offer them to you. Most loan officers simply don’t have the resources, experience, or knowledge to answer these questions with certainty. In fact, many of them will lie to you and claim you aren’t eligible or will do everything in their power to make an assistance program appear to be of the devil.

How to Apply for the Dream For All Assistance Program
If you would like to get preapproved to learn about which home loan or homebuyer assistance program will benefit you the most, fill out this Down Payment Assistance Prequal Form.