Would you trade price appreciation for a chunk of your down payment?

[wiggin]

This only sounds like its worth it for people who are coming from nothing but moving into an extremely well paying job. Sign up for this program, make bank, pay off home asap, sell to family member for pennies, pay off minimal appreciation.

I think this is explicitly forbidden. They have various (somewhat vague) safeguards in place to prevent abuse. While they don't in any way control when you sell your house, I think they have some control over things like selling an artificially discounted home to a conspirator.

I think this actually makes sense for two kinds of homeowners: either modestly paid professionals who have good long term career prospects but are short of capital now - it will take them forever to get enough capital for a down payment in an expensive area, but their steady income is enough to cover a decent mortgage. The other category is similar to what you suggest, the HENRY (high earner, not rich yet) who doesn't want to wait a few years before being able to afford a house. Here the argument is that you save a few years of rent and lost appreciation by buying now what is likely a starter home, so your lost 25% of appreciation doesn't sting as much when you sell in 5 years.

The thing that sticks for me is that 80% of a lot is still a lot. Sure, you get help on the down payment, but my fundamental dilemma where I live is that even if I had a 20% down payment, covering the mortgage payments on a home that costs well over $1 million is pretty challenging, even with two reasonably well paid professionals. In that case, the only real option is to start small and move up the housing ladder by using appreciation and (modest) principal payoffs every ~5 years to upgrade. While taking the 10% to jump start the process is nice, it cuts into your ability to quickly upgrade without paying the investors off early.

On a whim I put our income information into their calculator, and they claimed I could afford a ridiculously expensive home with their service. It was an obvious overstatement of reality - the mortgage payments alone would have crippled our budget and left no room for, say, childcare. Combined with a lot of uncertainty about some handwaving in the small print (e.g. they do valuations to determine how much improvements you put in change house value, the details of early payoff are quite unclear, etc.) it leaves me less than excited.

Maybe there's some appeal for senior citizens? Some may care less about home appreciation and more about the price stability and configuration flexibility offered by owning a home versus renting (I realize this is not necessarily always the case and is highly depending on a lot of factors, including local market conditions).

Honestly it sounds like a really bad idea for senior citizens. I really don't think it makes sense for senior citizens to take on a lot of debt to finance their housing. I'm actually well disposed toward reverse mortgages, but that's kinda the reverse.