Shared Appreciation Loans

Public Shared appreciation loans are generally second mortgages provided to homebuyers by a local government agency or nonprofit which require that homeowners repay not only the initial subsidy that they received, but also a share of any appreciation in the market value of the assisted home. By recapturing a portion of home price appreciation, this approach increases the amount of subsidy available to assist the next purchaser, reducing the likelihood of an affordability gap.  Some of these programs couple shared appreciation loans with a right to purchase the seller’s home (at market value) allowing the program sponsor to retain affordability of the home by reinvesting the recaptured equity.

Not all shared appreciation loans are used for the purpose of preserving affordability. Some public agencies use recaptured equity for other purposes. There have also been many proposals for privately financed shared appreciation mortgages in which recaptured equity would be repaid to investors. We limit the use of the term “shared equity homeownership” to programs that attempt to achieve both homeowner asset building and durable affordability.

Learn More

  • Preservation of Affordable Homeownership: A Continuum of Strategies
  • This report, one of several related resources published by the Center for Housing Policy, provides an overview of the strategies available to help communities preserve affordability of assisted homeownership units and explains the pros and cons of different approaches.  The report describes grants, forgivable loans, deferred loans, shared appreciation loans, deed restrictions/covenants, community land trusts […]

  • San Diego Shared Appreciation Loan Program
  • The City of San Diego operates a fairly typical public shared appreciation loan program.  They city will lend borrowers up to 17% of the value of a home in exchange for up to 17% of any future price appreciation.  This program brochure provides an overview of the program rules and requirements. Download: Program Guidelines – […]

  • Homeownership 2.0
  • Picture 10 This report by the Asset Policy Initiative of California outlines a blueprint for building responsible pathways to homeownership for low and moderate income homeowners. The report highlights shared equity homeownership as one element in a more comprehensive strategy to ensure that lower income households have meaningful asset building opportunities.