The California Dream for All Program: Exploring the Pros and Cons of This 20% Down Payment Loan for Homebuyers

Chloe Dertinger  |  April 4, 2023


The California Dream for All Program: Exploring the Pros and Cons of This 20% Down Payment Loan for Homebuyers

The California Dream for All Program proposes to give 20% down payments to eligible homebuyers, a bold move aimed at increasing access to homeownership for low and middle-income families in the state. While the proposal has received praise for its ambitious goals, it has also faced criticism for its potential drawbacks. 


Benefits for Homebuyers


The main benefit of the 20% down payment loans is obvious: they enable more people to afford homes. Many potential homebuyers in California are deterred by the large upfront costs associated with purchasing a home. By providing 20% down payment loans, the California Dream for All Program makes homeownership more accessible to those who may not have been able to afford it otherwise.

Another benefit of the 20% down payment loans is that they may enable homebuyers to secure better loan terms. Homebuyers who can put down larger down payments are typically seen as less risky to lenders, which may result in lower interest rates and lower monthly payments. This can save homebuyers money in the long run and make homeownership more sustainable over time. 


Disadvantages for Homebuyers


While the 20% down payment loans have many potential benefits for homebuyers, they also come with some potential disadvantages. One of the main disadvantages is that the loans may make it harder for some homebuyers to qualify for a mortgage. Depending on the specific requirements of the loan program, homebuyers may need to meet stricter income and credit score criteria in order to qualify for this loan. This can be a barrier for some families who may struggle to meet these requirements. You can view the eligibility criteria here.

Another potential disadvantage of this program is that this is an equity share program, meaning that once you sell your home, you will be required to share 20% of any appreciation in the value of the home plus the original 20% down payment loan. Let’s say you purchase a home for $500,000 and receive $100,000 for your down payment (20%). In the event that you refinance the loan or sell your home, you not only owe the down payment ($100,000) back, but you also are giving them 20% of the equity of the appreciation. For example, if your property appreciates $100,000, you will be paying back $100,000 for the down payment you borrowed plus $20,000. Essentially, you’re borrowing this money at a 20% interest rate. 


“It’s a gamble. The reward is that you get the down payment assistance at the time of purchasing. The risk is the payback on the appreciation of the house.” -Katie Moe (Founder & Realtor of Connect California Homes) 


Another risk of this program is that it is not competitive. As a home buyer, if you are in a multiple offer situation, it is rare that a listing agent would prefer this loan program over a buyer with a conventional mortgage offer due to the fact that your purchase would essentially be 100% financing. Therefore, home buyers who use this program would typically be narrowing their search down to homes that have been sitting on the market for a while to avoid competition with other buyers.




The California Dream for All Program’s proposal to give 20% down payment loans to eligible homebuyers has both benefits and potential drawbacks. While the loans make homeownership more accessible to low- and middle-income families, they may also make it more difficult for some homebuyers to qualify for a mortgage and save for other expenses. Ultimately, the success of the loan program will depend on how it is implemented and the response of the housing market. Homebuyers should carefully consider the pros and cons of the program with their mortgage lender before deciding whether to pursue a 20% down payment loan through the California Dream for All Program.

If you’d like more information about the California Dream for All Program, listen to this in-depth, real talk discussion between Founder & Realtor Katie Moe of Connect California Homes and Mortgage Lender Jenna Gray from Guaranteed Rate:

*please note Connect California Homes is not a licensed mortgage broker, please seek your trusted professionals for any tax, mortgage, or financial advice.

Recent Blog Posts

Stay up to date on the latest real estate trends.


Sharing Knowledge & Empowering Our Community: Connect California Homes’ FREE Home Seller’s Seminars

Chloe Dertinger  |  March 1, 2024

Selling your home can be a daunting task, especially if you're unsure where to start or how to leverage your property's equity effectively. That’s why Connect Californ… Read more


Where to Find Santa in the East Bay Area

Chloe Dertinger  |  November 15, 2023

The Holiday Season has arrived, which means Santa Claus is coming to town! Here are many opportunities to find Santa around the East Bay Area for a magical photoshoot … Read more


The Story Behind the Sale - 3484 Windsor Court, Pleasanton

Chloe Dertinger  |  November 7, 2023

2023's Only $2M Home Sale in Pleasanton Meadows


Top 12 Questions To Ask When Interviewing A Realtor®

October 31, 2023

Selling a home is a significant decision that involves multiple considerations and complexities. When a homeowner is considering embarking on this journey, seeking the… Read more


Volunteer Opportunities for Breast Cancer Awareness Month in the Tri-Valley/East Bay Area

Chloe Dertinger  |  September 25, 2023

Volunteering is a meaningful way to make a difference in the fight against this devastating disease. Through volunteering, you become an essential part of a collective… Read more


What Experts Project for Home Prices Over the Next 5 Years

Katie Moe  |  September 14, 2023

If you're planning to buy a home, one thing to consider is what experts project home prices will do in the future and how that might affect your investment. While you … Read more


Selling Your Parent's Home

Chloe Dertinger  |  September 5, 2023

In times of change and transition, we understand the emotional connection that often comes with selling a beloved family home filled with years of precious memories.  … Read more


Comparing Today's Housing Market to our Previous 'Unicorn' Years Doesn't Add Up: Here's Why!

Chloe Dertinger  |  July 11, 2023

Attempting to compare housing market metrics between different years can be quite difficult in a typical housing market scenario. However, it's important to note that … Read more


Selling Your House Off-Market: Is It the Right Choice for You?

June 12, 2023

Considering selling your house? Learn about the benefits and drawbacks of off-market home sales, a discreet alternative to the traditional on-market approach.

Let’s Connect

You’ve got questions and we can’t wait to answer them.