Is DPA Forgivable

When you sell your home, the proceeds first go to pay off your primary mortgage, followed by any CalHFA subordinate loans (MyHome, ZIP, Dream For All). If the property value has dropped or not appreciated enough to cover the sales costs and these liens, you are typically still responsible for the debt. However, for the Dream For All program specifically, if the home does not appreciate in value, you are generally only responsible for the original principal amount. CalHFA shares in the appreciation, but borrowers generally are not penalized with shared appreciation costs if the home value remains flat.

Yes, for the MyHome and MyAccess programs, you will owe more than the original loan amount. Both programs charge a 1.00% simple interest rate. While this rate is low, it accrues annually. For example, if you borrowed $10,000, you would accrue $100 in interest per year. After 10 years, you would owe the original $10,000 plus $1,000 in accrued interest. This is different from the ZIP loan, which has 0% interest (you pay back exactly what you borrowed), and the Dream For All, where the repayment amount depends entirely on the market value of your home.

Yes, the Accessory Dwelling Unit (ADU) Grant Program is the primary exception. This program provides up to $40,000 to assist with pre-development and non-recurring closing costs for building an ADU. Unlike the down payment assistance products, this is a true grant and does not require repayment. However, because it is not a loan, the IRS treats the grant funds as taxable income. Borrowers who utilize this program will receive a Form 1099-G and should consult with a tax professional regarding the tax implications of receiving these funds for their construction project.

You are required to repay CalHFA assistance loans immediately upon the occurrence of a “trigger event.” The most common triggers include selling the property to a third party, transferring the title to a spouse or family member, or refinancing your first mortgage (with the limited exception for Dream For All). Additionally, if you live in the home for the full 30-year term and pay off your first mortgage, the subordinate loans become due immediately. Finally, if the property goes into foreclosure (a Notice of Default is formally recorded), the assistance loans are accelerated and become due and payable.

Generally, no. For the MyHome, ZIP, and MyAccess programs, CalHFA usually does not allow subordination for a standard voluntary refinance. This means if you want to refinance your first mortgage to get a lower interest rate, you are required to pay off the assistance loans in full as part of the transaction. The only exception is the Dream For All Shared Appreciation Loan, which allows for a one-time limited cash-out refinance where the state will agree to remain in the second lien position, allowing you to lower your rate without immediately paying back the appreciation share.

The Dream For All loan is unique because you repay the original principal plus a share of the home’s appreciation instead of traditional interest. If your home increases in value, you will owe the 20% principal you borrowed plus a percentage of that growth (typically 20%, or 15% for lower-income borrowers). The total repayment amount is capped at 2.5 times the original loan amount. This loan is not forgivable; if you sell the home or transfer title, CalHFA collects its share of the equity to reinvest in future homebuyers. Repayment is deferred until sale, transfer, or refinancing.

While the Zero Interest Program (ZIP) offers a 0.00% interest rate, it is not “free money” or a grant; it is a loan that must be repaid. Because the interest rate is zero, the amount you owe in the future will be exactly the same amount you borrowed at closing; the balance does not grow over time. However, like other CalHFA subordinate loans, the ZIP lien must be satisfied upon the sale, refinance, or transfer of the home. It essentially acts as an interest-free bridge loan to help you cover closing costs without depleting your personal savings.

The MyHome Assistance Program is a loan, not a gift. It carries a simple interest rate of 1.00%. “Simple interest” means interest is calculated only on the principal balance, not on previously accrued interest, making it less expensive than compound interest debts. Repayment of the principal plus all accrued interest is required when you sell the property, refinance your first mortgage, transfer the title to another person, or pay off the first mortgage in full. Because it is not forgivable, you must account for this future payoff amount when calculating your potential equity upon selling the home.

No, you do not need to make monthly payments on CalHFA subordinate loans. Programs like MyHome, ZIP, MyAccess, and the Dream For All Shared Appreciation Loan feature fully deferred payments for the life of the loan (typically 30 years). This structure is designed to keep your monthly housing costs affordable by ensuring your monthly obligation is limited to your first mortgage payment (principal, interest, taxes, and insurance). However, even though no bill is sent monthly, the loan is still active, and interest (or appreciation) may be accumulating in the background until the loan is eventually paid off.

No, generally speaking, CalHFA down payment assistance options like MyHome, ZIP, MyAccess, and the Dream For All Shared Appreciation Loan are not forgivable grants. They are structured as deferred-payment subordinate loans. This means you are borrowing the money to cover your upfront costs, and a lien is recorded against your property title. While you do not have to make monthly payments on these loans, the debt remains owed to the agency. You are required to repay the full principal balance, plus any accrued interest or shared appreciation, when a specific trigger event occurs, such as selling the home or refinancing.