Shared Appreciation Mortgage

Brief: Special mortgage instruments like a shared appreciation (or shared equity) mortgage are designed to assist buyers in purchasing a home with a lower interest rate or lower down payment in exchange for the sharing of appreciation accrued during the life of the property.

Description: The homebuyer may receive a reduced rate on either the entire home loan or a portion of it (such as the down payment portion of the purchase) in exchange for sharing the appreciation of the home upon sale with the loan-issuing agency. Terms of the mortgage may establish required lengths of ownership relative to the amount of appreciation shared.

San Diego Shared Equity Program, San Diego, CA (CCDC)
Shared Equity program can provide a second loan for a maximum of 25 percent of the purchase price. This second trust deed loan is a 30-year shared equity loan with zero percent interest and no monthly payment. However, if the buyer sells the property within the first 15 years, the appreciation earned in the property must be shared with the Housing Commission. Eligible homebuyers must earn 80 percent or less of the area median income and must have sufficient funds for a minimum down payment of three percent in addition to paying the closing costs. However, the availability of the loans are pursuant to the amount of available funding.

Home Ownership Partnership Enterprise (HOPE), Contra Costa County, CA
In exchange for the provision of purchase assistance funds to the Home Owner, HOPE will receive a Note and Deed of Trust on the property requiring repayment of principal upon sale and a portion of the equity appreciation realized upon sale of the home. Both the repayment of principal and the equity allocation will go back to HOPE to allow more home owners to receive assistance by increasing the pool of funds. The program will be funded through the purchase of the In Lieu Units (Units) by builders, from HOPE.

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