Sharing Home Equity

Soo, unless you live under a rock you heard about the mountain of money in the CalHFA loan program. Well, if you didn't it's too late for that program. All the funds are approved/used by other buyers.

Basically an equity share loan with the buyer and the state. They lend you, based upon your income, your down payment. It doesn't get paid back until you sell your home in the future. But, you do have to give them the same amount of increased equity as they lent you. In other words, you get a 20% down payment. When you sell, you pay back that 20%, plus 20% of the increased value in your home.

So, shared equity. We had a buyer that was lucky enough to get approved for the loan. Their income was over 150k per year. They were to get their 20% down payment from the program. But, things didn't work out, so the escrow cancelled. 

We have another buyer that is doing this very same type of program, but with their parents.

Parents are giving them 100k, but when they sell the home in the future, the parents will get back the 100k plus a percentage of the equity from the sale previously agreed upon.

So, why am I telling you this? Because, you can do this as well. With a relative that has money sitting in the bank earning low interest, this may be more lucrative for them for future earnings.

Sure, it can be a bit of a risk, but as long as they are guaranteed to get their full amount of money back, maybe this would appeal to them.

I'm honestly not a fan of mixing money and family. Not a fan at all. But, I suppose if the state trusts you to pay it back, your family might as well.

If you have questions, just holler, Leslie & I are happy to answer your questions and/or send you to the appropriate person to answer them even better.