New HUD Pilot Program Offers Down Payment Loans Up To $150K—But Demands a Share of Your Home's Appreciation

The newly proposed American Dream for All Act sets up a five-year pilot program run by the Department of Housing and Urban Development (HUD). Its goal is straightforward: help first-time and first-generation homebuyers clear the biggest hurdle—the down payment—by offering substantial loans channeled through state and tribal housing agencies.

The Loan: Big Help, Big Catch

This isn't your average down payment assistance. The program offers loans ranging from 3% up to 20% of the home's purchase price. The maximum loan amount is tiered based on local cost of living: up to $150,000 in high-cost areas, $100,000 in medium-cost areas, and $50,000 in low-cost areas. These maximums will be adjusted annually for inflation, which is a smart move given how fast housing costs change. The catch is in the repayment structure, which gives the program its name: Appreciation Sharing (Sec. 2).

If you take this loan and your home appreciates (goes up in value), you don't just pay back the original loan amount when you sell; you also pay back a percentage of the profit. Essentially, the government entity that gave you the loan takes a cut of your equity gain. For example, if you took a 10% loan and the house appreciated by $50,000, you would owe the original loan amount plus 10% of that $50,000 appreciation. However, if the market tanks and your home loses value, you only have to pay back the original loan amount, which offers a decent safety net against a housing crash.

Who Gets the Keys?

This program is laser-focused on specific buyers. To qualify, you must be a U.S. citizen or permanent resident, and your income cannot exceed 150% of the Area Median Income (AMI). You also have to complete a required homebuyer education and counseling course. Crucially, you must be either a first-time homebuyer or a first-generation homebuyer (Sec. 2).

The bill defines a first-generation homebuyer as someone whose parents never owned a residence (excluding heir property or mobile homes/chattel). This is a vital distinction aimed at correcting generational wealth gaps. However, the bill adds a tough condition: applicants must self-attest that they cannot afford to put more than 5% of the home's value toward the purchase using their own funds. This strict requirement could exclude people who have saved a bit more but still need a boost to afford a home in a high-cost market.

The Revolving Door of Equity

For the state and tribal entities receiving the grants, this program is designed to be self-sustaining. The money they get from the federal government must be placed into a revolving loan fund. When a borrower sells their home and repays the loan (plus the appreciation share), that money goes right back into the fund to help the next eligible buyer. This mechanism ensures that the initial federal investment keeps working for new generations of homebuyers, rather than being a one-and-done subsidy. However, these entities are limited to spending only 15% of the grant money on administrative costs, which might be a tight squeeze given the complex reporting HUD requires (Sec. 2).

The Trade-Off: Equity vs. Access

This bill offers a clear path to homeownership for those locked out by down payment costs. But the shared appreciation model introduces a major trade-off. For the buyer, it’s instant access to a home in exchange for limiting the future wealth they can build from that asset. If you buy a starter home with this loan and it appreciates significantly, you’ll owe a substantial amount when you sell to upgrade, effectively capping the equity you can use for your next move. It’s a good deal for getting into the market, especially in volatile areas, but it means a successful homeowner will be sharing their financial success with the government fund designed to help others, which is a critical detail for anyone planning their long-term financial future.