LOS ANGELES (KABC) — California will provide $250 million in down payment assistance this spring to restart its widely popular program to assist first-time homebuyers.
Last year, the Dream for All program started with $300 million and it was all used up in just 11 days.
This year, the California Housing Finance Agency made changes to reach a more diverse group of borrowers across the state. This time, instead of starting the program, there will be a lottery on a first-come, first-served basis.
How does the Down Payment Assistance Lottery work?
“The next round of the California Dream For All Shared Appreciation Loan Program will focus on first-generation homebuyers and utilize a lottery system to ensure equitable distribution of loans,” the department said in a statement. “Interested homebuyers can work with a licensed loan officer or approved lender now to prepare to submit lottery applications in April.”
As many know, buying a home for the first time can be challenging and for many, the hardest part is making the down payment.
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“Resources are limited, they may be burdened with debt from school or other sources, so it's a very big challenge,” said real estate agent Sarah Moore, who said more people are now aware of the Dream for All program.
“That's helpful because when it was first introduced there wasn't a good way to inform buyers out there,” she said.
All of this comes as home sales have slowed.
Sales in December were 6.2% lower than a year ago, but prices are still high. Data from Zillow shows typical home values in Southern California are higher than 2022 highs.
In Los Angeles and Orange counties, the typical home value is just over $900,000. In Ventura County it's just over $831,000 and in the Inland Empire it's just under $560,000.
How much do I get?
The state will pay up to 20% of the purchase price or $150,000, whichever is less. The loan is then repaid, plus a share of the home's appreciation if it is sold in the future.
“When they pay that back, it goes back into the program and allows someone else to benefit from it,” Moore said. “So I feel like it’s a very reciprocal thing where everyone wins.”
Official estimates suggest that between 1,700 and 2,000 lottery winners will receive vouchers and then have 60 days to buy a home.
Further information on how to apply can be found here.