What’s the Latest on Homebuyer Programs? Our Index Tells You.

The Down Payment Resource Third Quarter 2016 Homeownership Program Index (HPI) found that the number of total programs decreased to 2,392, down 3 percent from the previous quarter (2,477). Nearly 88 percent (87.9%) of programs currently have funds available for eligible homebuyers, up 3 percent from the previous quarter.

The reduction of programs was primarily due to the expiration of more Neighborhood Stabilization Programs (NSP) offered by localities after the housing crisis. This was expected, as NSP funding came to a halt after round three (NSP3) in 2010. NSP programs helped numerous communities rehab, resell and redevelop high-foreclosure neighborhoods and offer very flexible income limits, purchase price limits and down payment help.

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Community workers challenged in high cost markets

Moderate income workers in high cost markets, often opt out of homeownership due to the high home prices and market competition. In fact, the National Housing Conference’s “Paycheck to Paycheck” study found that none of the school occupations earned salaries that were high enough to guarantee either renting or owning a home in every metro area included. Plus, high school teachers earning median wages are only able to afford to buy a median-priced home in 130 out of the 210 metros analyzed.

More areas are launching programs to retain important community service workers. The HPI found that 6 percent of programs are available for community service workers, including educators, police officers, firefighters and healthcare workers.

Examples of programs include:

  • The City of San Francisco Teacher Next Door Program offers up to $20,000 for down payment and closing costs to eligible educators with income limits up to 200 percent of the area median income (AMI).
  • The Georgia Dream PEN (Protector-Educator-Nurse) Program offers up to $7,500 for down payment and closing costs for a wide array of eligible police officers, firefighters, public educators and healthcare workers across Georgia.
  • The Ohio Housing Finance Agency’s (OHFA) Ohio Heroes Program offers reduced interest rates for qualified veterans, first responders, healthcare workers and educators.
  • Numerous states and municipalities offer similar programs to our nation’s core service providers, enabling them to live where they work.

Homebuyer snapshot

The HPI analyzed anonymous, aggregate data from approximately 33,500 homebuyers who successfully completed program searches at DownPaymentResource.com between June and August 2016. Homebuyers received customized results that fit their household characteristics and homeownership goals.

  • The average household size was 2.75.
  • The average household income entered was $53,846.
  • The average home purchase price provided was $180,084.
  • Homebuyers found an average of 8.5 programs per successful search.

To qualify for a homeownership program, both the buyer and the property must meet certain criteria, which vary by program. These demographics suggest healthy incomes, growing families and a wide array of homeownership programs available to the next wave of prospective buyers.

“First-time homebuyers are eager to learn about down payment programs that can help them save on their home purchase,” said Chrane. “We’re convinced there is a groundswell of buyers ready, qualified and learning how best to proceed.”

HPI Highlights

  • 64% of programs have a first-time homebuyer requirement. This is defined by HUD as someone who has not owned a home in 3 years.
  • 76% of programs are available in a defined area, such as a city, county or neighborhood. 24% of programs are available state-wide through state housing finance agencies.
  • 6% of programs are available for community service workers, including educators, police officers, firefighters and healthcare workers.
  • 5% of programs have benefits for veterans and members of the military. These programs can also be layered with zero down payment VA loans.
  • Nearly 70% of programs in the database are down payment or closing cost assistance. 9% of programs are first mortgages and 8% of programs are Mortgage Credit Certificates (MCCs).
  • States with the greatest number of down payment programs remains consistent—California, Florida and Texas are the top three. Washington edged out Virginia in total number of programs to take the number 10 spot. View a complete list of state-by-state program data.
  • More than 50 percent of programs accept online homeownership education.

Download the full press release.