Can I House Hacking CalHFA Dream For All Shared Appreciation Loan?

Question

I recently was on a call with a loan officer on this new shared appreciation loan program CA is offering. Through the program, the state will give you 20% of the down payment or $150K (whichever is less) at no interest. However, when you sell the home, you will owe 20% of any appreciation on the home in addition to whatever you borrowed.

My intention going into this was to house hack for a year or so and then refinance. However, after talking with the loan officer, he said you cannot change your primary residence while in this loan (even after a year) and that it was technically the same for FHA loans. But I've heard many people house hack with an FHA loan where you use it as your primary residence for a year, and then you can move out and rent the rooms no problem. Is this a scenario where it is technically not allowed but many people do it?

Harrison Colunga · Answer

Hello Dillon!

As a loan officer, I'd like to mention that CalHFA has a "lottery" system in place. So make sure not to rely too much on securing the CalHFA loan.

Anthony Swain · Answer

Hey @Dylan S. sounds like a unique loan program. I'm sure it has something to do with the housing affordability in CA :o. If I was to win that lottery, I'd probably look to buy the best property I could afford and never sell haha  Albeit, there is probably other fine print.

To my knowledge, you can keep an FHA loan after you leave. In that scenario, you would pay PMI for the life of the loan regardless of your equity percentage. Many people refinance out of FHA into conventional to remove PMI and potentially use their FHA loan again on another property. *You can only have one FHA loan at a time

I'd consult with a lender or two to give you a much deeper scope of your loan options and what makes the most sense.I am not a lender. This is just to my basic understanding. -Ant

Dylan S. · Answer

Thanks Harrison. I'm aware it's a lottery system. I just registered, but want to make sure I understand the consequences of my strategy fully if I am selected.