Step 1

Start by preheating your oven to 350°F (175°C). Grease an 8×8-inch baking pan or line it with parchment paper for easy removal.

Step 2

In a medium bowl, whisk together the flour, baking soda, baking powder, salt, cinnamon, and nutmeg. Set aside for later use.

Step 3

In a large mixing bowl, beat the softened butter with granulated sugar and brown sugar until light and fluffy. This step is crucial for creating a tender crumb. Add the egg and vanilla extract, beating until well combined.

Step 4

Add the sour cream to the butter mixture, stirring until smooth. Gradually fold in the flour mixture, being careful not to overmix. Gently fold in the diced apples, ensuring they’re evenly distributed throughout the batter.

Step 5

In a separate bowl, beat together the softened cream cheese, granulated sugar, egg, and vanilla extract until smooth and creamy.

Step 6

Spread half of the cake batter into the prepared baking pan. Layer the cream cheese filling evenly over the batter, then top with the remaining cake batter.

Step 7

In a small bowl, combine the flour, brown sugar, and cinnamon. Cut in the cold butter pieces until the mixture resembles coarse crumbs. Sprinkle the streusel evenly over the top of the cake.

Step 8

Bake in the preheated oven for 40-45 minutes or until a toothpick inserted in the center comes out clean. Let the cake cool in the pan for about 15 minutes before slicing.

Step 9

Tip: Use fresh apples for the best texture and flavor. For a richer cake, substitute half of the butter with applesauce.