Article By: Jim Porter – January 26, 2024
The California Dream for All program details were released Jan. 19, and our friends up at the California Housing Finance Agency sure hope more people will have a fair shot at winning this 20% down payment than they did last year when $300 million sold out in six business days.
I wrote a few columns and even did a webinar about the program last year because the 2023 edition of Dream for All was mathematically the best down payment assistance program I had ever seen in my 40-year career.
The terms of this year’s 20% down payment program is still a no-brainer decision for a homebuyer lucky enough to win this new proposed CalHFA lottery. However, the odds of nabbing one of these Golden State Tickets has not been disclosed.
I am going to stick my neck out and estimate the odds based on the huge number of Dream for All phone calls my team has received this week. Now, keep in mind, I was embarrassed last year when I predicted the program would take a month to sell out after CalHFA told me they expected the funds to last for two to four months.
Lots of high-FICO, high-income and financially smart first-time homebuyers jumped on the 2023 Dream for All program and bought high-end starter homes with 20% down payments and no sales price limit, which allowed a first-time homebuyer to buy a house or condo for $1 million, get $200,000 from Dream for All and bring in $74,000 in cash from their savings account or from a gift from family and then obtain a $726,200 loan from CalHFA, which was a dream for some.
The three significant changes for 2024 are designed to make Dream for All harder to get and easier for people to have a chance to get this shared appreciation $150,000 loan with no monthly payments or interest for 30 years (the Golden State Ticket).
The three changes are:
• One of the loan applicants must be a first-generation homeowner.
• The maximum Dream for All loan is 20% of the sales price or $150,000, whichever is lower, and the buyer can only bring in a maximum of 5% of the sales price in cash, which will make it more difficult for wealthy people to take advantage of this lucrative program.
• Applicants can begin the process today, get pre-approved by a CalHFA approved lender, and then in a couple months from now, CalHFA will open a registration portal for first-time homebuyers to enter a lottery and hope to win the Golden State Ticket to paradise.
OK now, for my handicapping the odds of winning the lottery for those lucky enough to have parents that have not owned a home in the past seven years. First, let’s look at the math, $220 million divided by what I guess will be the average down payment amount of $100,000 = 2,200 lucky homebuyers will win the lottery.
I tried to ask OPEN AI if it could give me its estimate on how many buyers will register with their preapproval letter by April Fool’s Day and it could not give me a straight answer.
I can tell you this much. As of today, the odds of winning one of the 2,200 down payments are way better than winning the California State Lottery and slightly better than finding a Golden Ticket in your next Willy Wonka chocolate bar.
The odds of a person becoming financially happy and independent by the time they are 65 to 70 are dramatically better if they buy a house before they are 40, escaping the rent trap, and then manage their money wisely till they retire.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.
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