California Dream for All House Hack

[Matthew Valencia]

Hello everyone! My name is Matt and I am 26 years old. I'm looking for some advice on what route I should take. I am looking to buy my first home this year in Ventura county. I have put in a lot of thought to many different strategies that I would like to possibly take. I am currently renting for very cheap but I want to begin to start my real estate portfolio and get my foot in the door early. I recently was approved for a conventional loan w 10% down 5.8 interest rate and no PMI. I recently got approved for close to the same amount but a little more than the conventional through the california dream for all loan assistance program. The stats were 6.125% interest rate, NO PMI and 20% down. Many of you already know the requirements for CalHFA loan. My plan is to utilize the CalHFA and house hack the property for 5-10 years or until I see appreciation in the home and cash a refi for a bigger home. In the mean time while living in this home I want to buy out of state investment properties. My only issue is. If I do this I am tied to living in the home UNTIL I sell (On CalHFA guidelines). I don't want to hinder my ability to buy investment properties if using this loan will make it more difficult to be approved for investment properties. Also, here in Ventura county it is VERY HARD to find even a house hack that will break even. I will definitely be raising my cost of living and expenses if I decided to buy a home with this loan here in vta county. I am tied to Ventura county bc my job does not allow me to be further away. I was also curious on if I can even legally house hack the property? Will this effect my debt to income ratio to the point where I can't be approved for investment properties? Should I just go with a conventional loan to make the property a rental sooner than later?

[Dan Garrigus]

Hi @Matthew Valencia I would be cautious using the Dream For All program to buy your first home to house hack if the ultimate goal is to continue buying homes as investment properties. Mind you the lender will not be able to factor in any income from the second unit to help you qualify to purchase. You’re better off using your money on the first as you will get to use equity in the home overtime to make your next purchase faster. Using Dream For All will most likely have a repayment of approximately 105% of the purchase price meaning it’s going to kill the opportunities to get out from under the program and begin building equity to use like most investors. Who is Dream For All good for, someone who finds their actual Dream Home and has zero plans to move in the next 10-15 years and does not care about appreciation and equity to remodel, paying for education, starting a business or concerned about life events such as job relocation, divorce or death. 

If you’re set on purchasing with the Dream For All, I would suggest buying this week. I know you said you were approved for the program but they are not holding the funds until you have an executed purchase agreement. The program will only be funding  roughly 2000 of the 330,000 CA home purchases this year. Thats 27,500 sold a month. Funds will go fast. Many buyers who have been quoted on this product will end up losing out but only finding out after they are in contract. 

My advice, use your own money to have the most options available to you when an opportunity arises. 

Would be happy to chat more, feel free to reach out. Have a great day Matthew.