California's down payment assistance lottery reopens

Changes aimed at reaching a more diverse group

California will dole out $250 million more in down payment assistance to first-time homebuyers this spring, while making changes to its 1-year-old program aimed at reaching a more diverse group of borrowers across the state.

Last year, frenzied homebuyers gobbled up nearly all $300 million budgeted for the California Dream for All loan program in just 11 days. Though the new program was wildly popular, some Realtors and lenders reported that clients who received the funds were already far along in the home purchase process, fueling speculation about whether the loans were going to people who already could afford to buy homes.

The program’s next round keeps the same “shared appreciation” lending model: The state will give first-time homebuyers money toward a down payment — up to 20% of the purchase price or $150,000, whichever is lower — then it will get paid back the loan plus a share of the home’s appreciation whenever it sells again.

This time the California Housing Finance Agency, which administers Dream for All, hopes to head off a mad scramble for the loans by replacing its original first-come, first-serve model with a lottery.

Homebuyers will have until April to find a stateapproved lender and start working on an application. A lottery opens in early April, and buyers will have a month to submit their applications. Between 1,700 and 2,000 lottery winners will receive vouchers that they’ll then have 60 days to spend on a home.

More time to prepare

The extra time to prepare should help Californians who may not be sure if they could buy a home without state assistance, said CALHFA spokesperson Eric Johnson.

The program is for people for whom homeownership “may be a dream, but they’ve got the steady income, they’ve got the decent credit score of above 660 and they’re thinking, ‘OK, wow, this could really make the difference,’ ” Johnson said. “This gives them time to get motivated, to find a loan officer. If they need to do a little work on their credit score or change their debt-to-income ratio, they’ve got time to work with one of our loan officers or brokers.”

The agency will set aside a number of vouchers for