SACRAMENTO, Calif. — A new California program aiming to help first-time homebuyers just opened up their lottery. Here’s what you need to know before you apply.
The “California Dream For All” program opened its lottery system Wednesday, allowing qualifying people to borrow a 20% down payment from the state to purchase their first home.
“Basically, you can get 20%, up to $150,000 towards your down payment and closing costs,” said Kevin Oto, a mortgage expert and broker.
But there are some strict qualifications for the tax-payer funded program with an allotted $520 million from the state general fund.
"You have to be a first-time home buyer… and this is new, you have to be a first generation homebuyer or at least one of the buyers does, which means one of your parents couldn't have owned a home," said Oto.
And while those who qualify would get a boost in affording a downpayment, there are restrictions.
“It's a shared equity program. So when you sell the house, you have to give up a portion of your equity,” said Oto.
If a qualifying Californian eventually sells their home, they would not keep all of the money for selling the home. They would have to return what the state gave them, with interest.
“Here's an example: if you bought a house for $500,000 today and you wanted to sell it five years from now, it's worth $600,000, they would take, depending on your income level, about 20% of that equity gain,” said Oto.
Some aren’t convinced it’s enough of a boost for homeowners, citing other expenses like utilities, property taxes or HOA fees.
Others think the first generation homeowner requirement is simply too strict, cutting out many potential homebuyers from the program.
The California Housing Finance Agency, who runs the program, says the program “serves as a complement to other homeownership programs that can assist a wider range of first-time homebuyers, including CalHFA's MyHome Program” but did not respond to ABC10’s specific questions about criticisms.
Those looking to participate must work with an approved lender offering the program. Find a list of Sacramento lenders here. Search for approved lenders by county here.
WATCH MORE: California Housing: A look at problems and possible solutions.
