California lawmakers are proposing creating a billion-dollar fund to help first-time homebuyers with their down payments.
The proposed program, dubbed “California Dream for All,” was put forward by state Senate President pro Tempore Toni G. Atkins.
The program would provide 17% toward the purchase price of a first home, either eliminating the need for a large down payment, or even potentially covering the entirety of the down payment for homebuyers, who would also receive mortgage counseling.
Once the homebuyer refinances or sells the home, the state would be reimbursed for the 17% share of the home value.
Atkins said the funds would then be reinvested into the program to help more first-time homebuyers purchase their homes.
“The California Dream for All program will give more people the chance to break free from the cycle of renting, become the first in their families to own a home, and make it possible for more people to set their children and grandchildren on a path to success,” Atkins said last month. “This has the ability to change people’s lives.”
California State Treasurer Fiona Ma said the program would provide a path for low-to-moderate income families to buy a home — something that has become unattainable amid the rising prices.
“Given that the current median price of a first-time home in California exceeds $590,000, conventional down payments of 20 percent have become unrealistic for far too many in the Golden State,” Ma said.
While the median price in 2021 was $590,000, the average price paid by a first-time homebuyer that year was $712,040, according to Atkins’s office.
That meant that only 26% of households statewide were able to afford to buy a median-priced home, and many California families were priced out of home ownership, officials said.
Officials said the problem was worse for families of color. Only 17% of Latino and Black households are currently able to afford the median-priced home, according to Atkins’ office.
The plan proposes a $1 billion investment in the program for the next budget year, with $1 billion being allocated every 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 unveiled 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 underway with Gov. Gavin Newsom on the final spending plan.