California lawmakers propose creating a billion-dollar fund to help first-time home buyers with their down payment.
The proposed program, dubbed “California Dream for All,” was proposed by the state Pro Tempore Senate Speaker Toni G. Atkins.
The program would provide 17% towards the purchase price of a first home, i.e. eliminating the need for a large down payment, or potentially even covering the entire down payment for homebuyers, who would also receive mortgage advice.
Once the buyer refinances or sells the home, the state would be refunded 17% of the home’s value.
Atkins said the funds would then be reinvested into the program to help more first-time homebuyers buy their homes.
“The California Dream for All program will give more people the opportunity to break free from the rental cycle, become the first members of their family to own a home, and allow more people to put their children and grandchildren on the road to success,” Atkins said last month. “It has the ability to change people’s lives.”
California State Treasurer Fiona Ma said the program would allow low-to-moderate income families to buy a home, which has become inaccessible amid rising prices.
“Given that the current median price of a first home in California exceeds $590,000, conventional down payments of 20% have become unrealistic for far too many people in the Golden State,” Mom said.
While the median price in 2021 was $590,000, the average price paid by a first-time home buyer that year was $712,040, according to Atkins office.
That meant only 26% of households statewide could afford to buy a median-priced home, and many California families were homeless, officials said.
Officials said the problem was worse for families of color. According to Atkins’ office, only 17% of Latino and Black households are currently able to afford a home at the median price.
The plan proposes a $1 billion investment in the program for the next fiscal year, with $1 billion allocated each year for a 10-year period.
Atkins’ office said work on “California Dream for All” began more than a year ago. Details of the program were revealed last month, when the proposal was heard by a Senate budget subcommittee.
On Monday, the legislature passed a budget that includes the proposal, but negotiations are still ongoing with Governor Gavin Newsom on the final spending plan.
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