Dream for All – again

Solano Real Estate Scene: Jim Porter

Article By: Jim Porter – July 29, 2023

I hesitate to even bring this up again because I was fooled April 1st when I told all my readers and Realtor partners about the greatest down payment assistance program in history.

Our California Housing Financing Agency, or CalHFA, representative told me that they expected the $300 million to last at least 90 days. When I told the CalHFA person that based on the guidelines, I thought it might sell out in a month, her response was, “we certainly hope not.” It was gone in less than 10 business days.

CalHFA announced a couple of weeks ago that another $200 million worth of Dream for All funds will be coming in the fall, and new guidelines will be coming, too, with no other details.

The first batch of 20% down payments were gobbled up by a ton of buyers in the higher-end markets who took advantage of the incredible shared-appreciation program. Dream for All gave first-time homebuyers a 20% down payment with no cap on sales price or income limits for buyers who made up to $215,000 in Solano County, and substantially more in counties like Marin, San Mateo and Los Angeles.

Local Realtors and lenders helped a few lucky Dream for All buyers. The maximum first-mortgage amount was only $720,200, but this allowed a buyer with $80,000 in cash to buy a house for $1 million and use that $80,000 plus the $200,000 from the state to avoid PMI and obtain a 30-year fixed-rate $720,000 loan with a payment of only $4,450 per month, which saved this first-time homebuyer more than $1,700 per month.

Many of these first-time homebuyers were already pre-approved to buy a house without the down payment assistance, but who in their right mind would turn down a $200,000 loan that required no payments or interest for 30 years in exchange for 20% of the equity that might exist when they sell the home?

These super-smart first-time buyers could invest the $1,700 savings per month for the 30 years and get 9% on their money in the stock market and would have $3.1 million in their brokerage account. Assuming the $1 million home tripled in value in 30 years, all they would have to pay is $400,000 plus the $200,000 out of their $3.1 million sitting in the bank. (That’s a $2.5 million profit.)

This was the biggest no-brainer in the history of first-time homebuyer programs, but it did very little for the thousands of buyers who needed this the most in Solano and Yolo counties, because the guidelines were so broad that the coastal-city market Realtors and buyers jumped for joy. Over my last 40 years in the business, income-based down payment assistance programs have almost never been available for home prices above $720,000 and usually only help folks looking below $600,000.

Dream for All is coming in the fall, but for first-time homebuyers today, CalHFA has down-payment money right now for buyers who make less than $215,000 per year to buy a house with zero down.

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.