The California Dream for All Shared Appreciation Loan Program is an innovative solution designed to help first-time homebuyers achieve their dream of homeownership. By providing up to 20% of the home purchase price for down payment and/or closing costs, this program makes buying a home more accessible and affordable. Let's take a closer look at how the shared appreciation loan works and what you need to know to make the most of this opportunity.

Understanding Program Appreciation Share

One of the key aspects of the Dream for All Shared Appreciation Loan Program is the program appreciation share. This is the percentage of the home price appreciation that the borrower must share with CalHFA when the loan is repaid. The program appreciation share varies depending on the borrower's income level:

Borrowers with Incomes Above 80% AMI

For borrowers with incomes above 80% of the Area Median Income (AMI) and up to the CalHFA Dream For All income limits, the program appreciation share is equal to the Shared Appreciation Loan amount as a percentage of the home value. This means that if you receive a 20% Shared Appreciation Loan, you will share 20% of the home price appreciation with CalHFA.

Borrowers with Incomes Less Than or Equal to 80% AMI

For borrowers with incomes less than or equal to 80% AMI, the program appreciation share is reduced to 0.75 times the Shared Appreciation Loan amount as a percentage of the home value. This means that if you receive a 20% Shared Appreciation Loan, you will share 15% of the home price appreciation with CalHFA.

Calculating Shared Appreciation

To calculate the shared appreciation amount owed to CalHFA at the time of sale, refinance, or transfer, follow these steps:

  1. Determine the current value of the home as determined by CalHFA.
  2. Subtract the lesser of the original sales price or original appraised value of the property from the current value to calculate the net appreciation.
  3. Multiply the net appreciation by the shared appreciation percentage to determine the shared appreciation amount owed.

It's important to note that the amount of shared appreciation is capped at 2.5 times the original principal amount of the Shared Appreciation Loan.

Maximum Loan Amounts and CLTV Requirements

The maximum Shared Appreciation Loan amount is up to $150,000 or 20% of the sales price or appraised value, whichever is less. To be eligible for the program, the Combined Loan-to-Value (CLTV) must be between 95.00% and 105.00%.

By understanding how the Dream for All Shared Appreciation Loan Program works, including the program appreciation share percentages, calculation of shared appreciation, loan amount, and CLTV requirements, you can make an informed decision about whether this program is right for you. With the help of CalHFA and Tennant Lending, you can navigate the homebuying process with confidence and take advantage of this unique opportunity to achieve your homeownership goals.

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