California first-time homebuyer loan program relaunches: How to apply

RELATED COVERAGE: New mortgage rules in effect for first-time homebuyers

The new rules went into effect May 1, 2023.

LOS ANGELES - Good news if you're looking to purchase your first home in California, but need a little extra assistance with that down payment.

The California Dream For All Shared Appreciation loan program, which was first introduced last year and was so popular that it ran out of the $300 million set aside to help first-time homebuyers in just 11 days, has relaunched, the state announced.

Made possible by the California Housing Finance Agency, the program gives eligible individuals 20% of the home's cost to help with the down payment.

There are some changes to the program this year, however.

This time, the program is modeled on a first-come, first-serve lottery system to better handle the thousands of applications the agency is expected to receive.

Here's how it works.

The lottery opens in April (exact date TBA), with the application website closing in May.

Between 1,700 and 2,000 hopefuls will be chosen to receive the voucher, which must be used in 60 days, Cal Matters reports.

A "For Sale" sign stands in front of a single family home in San Rafael, California, U.S., on Monday, June 8, 2020. (Photographer: David Paul Morris/Bloomberg via Getty Images)

You are eligible to apply if you've never owned a home or if you owned a home three or more years ago and sold it, according to CalHFA. You must also plan to live in the home you are buying.

Prospective homebuyers must work with state-approved lenders and must meet certain income requirements, which vary by county - but are down to 120% of area median income. Last year, it was 150%.

When the homeowner sells the house, the state will get a portion back (15% or 20% of any appreciation of the home depending on your income) and, in turn, use that money to help out the next first-time homebuyer.

If your home hasn't grown in value but you still want to sell, you'd be responsible for paying back the original 20% loan, according to the CalHFA.

The first phase of the California Dream For All program helped 2,182 new homeowners purchase a home with 55% self-identifying as belonging to communities of color, according to the program's website.

To learn more about the program, tap or click here.