How Down Payment Assistance Can Transform Black Homeownership
In 2023 many homebuyers found it tough to compete in a housing market with increased demand, high interest rates and home prices and limited supply.
We think this makes down payment assistance (DPA) more important than ever. As we look back at 2023, we’re proud of the growth and strategic changes we’ve made to bring current information on more than 2,200 programs to millions of consumers.
We didn’t stand alone in recognizing the difference some help with a down payment, closing costs or other fees have in helping more people purchase a home.
Throughout the year, we received very positive feedback from customers and partners that our tools are helping them make a difference in the lives of homebuyers.
We were also recognized as a company and individually for our efforts by professional organizations and leading publications, including:
To kick off the year, we turned a spotlight on DPA programs in our own backyard by reporting on the 46 DPA programs available to help metro Atlanta home buyers. In addition, we gifted one of our local housing agencies with $10,000 to help an eligible first-time homebuyer.
We were pleased to find our Q1 Homeownership Program Index (HPI) report showed a 0.5% uptick in the number of homebuyer assistance programs from the previous quarter. While some would assume these programs are limited to first-time buyers, they are not. In fact, many are open to repeat buyers such as the City of Dallas’ Anti-displacement Homebuyer Assistance Program (DHAP 10), which provides down payment support to low- and moderate-income Dallas residents who have lived in city limits for at least 10 years whether they’re buying their first home or their fifth.
We also drew attention to the increasing number of incentivized programs that offer assistance to select groups like veterans and military service members, firefighters, teachers and healthcare workers, such as the Holland (Michigan) Public Schools Teachers Live Here Program, which provides up to $25,000 in forgivable funds over five years for eligible educators.
Our Q2 HPI report noted another 0.5% increase in the overall availability of homebuyer assistance programs and made special mention of municipality-administered programs, which comprise the bulk (42.2%) of all DPA programs. A notable example is the City of Madison’s Home-Buy The American Dream (HBAD) program, which provides up to $35,000 in down payment and closing cost assistance in the form of a deferred, silent second mortgage that isn’t due until certain conditions are met, such as selling the home or refinancing the loan.
We also noted the 18% increase in state housing initiatives partnerships (SHIP) like the Clay County SHIP Purchase Assistance Program provides people purchasing a home in Clay County, Fla., up to $15,000 in DPA in the form of a 30-year deferred, forgivable soft second. Provided all program conditions are met, borrowers do not have to repay the loan at the end of its term.
While Q3 2023 was marked by interest rates topping 20-year highs, our reporting found that program administrators responded swiftly by rolling out 54 new DPA programs and more flexibility around how the funds are used, including allowances for funding buydowns to lower interest rates temporarily and other monthly payment reduction strategies.
For instance, Tenfold’s York Homebuyer Assistance Program offers up to $10,000 in down payment assistance (DPA) to first-time homebuyers purchasing homes in York County and York, Penn. The assistance comes as a 0% interest, silent second mortgage. The loan is fully forgiven over a five-year term on a prorated basis, provided all program conditions, such as owner-occupancy, are met.
During the year, we shined a light on programs for groups of people who may have felt disenfranchised by the housing finance system in the past, such as people with disabilities, Native American homebuyers, Black homebuyers and members of the military.
We added many new customers throughout the year, and, in September, we were proud to announce the onboarding of six new lenders — Elevations Credit Union, Embrace Home Loans, Homeowners Financial Group, HomeStreet Bank, RWM Home Loans and a regional bank. This significant milestone reflects the growing need for solutions that promote accessible and sustainable homeownership.
As we close out 2023, we continue to delve into the data collected from our database to unveil significant developments and emerging patterns in homebuyer assistance programs across the United States. Our database is the largest collection of program information, spanning all 50 states. We monitor each program monthly to ensure accuracy and funding availability.
Based on our canvassing so far, we anticipate a modest rise in the number of available programs from additional funding sources in the fourth quarter and we think more programs will offer flexibility so borrowers can use DPA to pay for reducing their interest rate, mortgage insurance premiums and fees associated with FHA and VA mortgages.
As evidenced in our quarterly reports and other outreach, the need for homebuyer assistance has never been greater. We are pleased to be the leading source in connecting our customers and their customers with the assistance homebuyers need to start building generational wealth through homeownership. We’ve been doing this since 2008, and we give it our all every day. We want to thank our customers, and we look forward to doing great things together in 2024.
(Stay tuned: Our official Q4 report comes out in January!)
Down Payment Resource has crafted tools to help mortgage lenders, real estate agents and multiple listing services build relationships with homebuyers by connecting them with the homebuyer assistance they desire.
To explore the best option for your business, contact us.