First Time Home Buyer Down Payment Help
By Dianne Anderson
With the high cost of housing and interest rates hitting about 7%, fewer and fewer Americans are living the dream.
If that rings true for most people struggling to afford their first home, it is particularly true for the Black community, which represents the lowest homeownership rate of all races of homeowners in America.
According to the National Association of Realtors 2024 Snapshot of Race and Home Buying in America, Black home ownership is at 44.1%, compared to Hispanic at 51%, and Asians at 63.3. For California, Black ownership is the lowest, now at 35%.
Besides race bias in lending, a lot of what stops access is downpayment assistance, an area that some local cities and organizations are trying to help fill the gap with more money and resources.
Jesse Ibarra, from Los Angeles, has seen housing prices escalate for a long time, with a lot of his own friends and family having moved to the Inland Empire for affordability. He sees a big gap, with prices at about $300,000 just to get into the most modest entry-level homes.
He said the problem is that most low and moderate-income people in this interest rate environment only qualify for about $200-250,00.
“Now the IE is having affordability issues, San Bernardino used to be very affordable, but you have your median home price just under half a million dollars,” said Ibarra, Chief Business Officer for the Neighborhood Partnership Housing Services, Inc., a HUD certified counseling agency.
To help the community get a foot in the door, NPHS offers $10,000 closing grant assistance, and combines other forms of help from local, regional and, at times, federal funding to get families into their first home.
“Because the median sales prices are affordable for most folks, especially low-income individuals have a very difficult time affording without substantial assistance. Without leveraging these programs it would be impossible for folks or families to generate wealth,” he said.
While most downpayment assistance programs require that participants complete an 8-hour course by a HUD Certified Counseling agency, he said NPHS goes above and beyond those requirements, offering several resources and HUD counseling to get people financially prepared.
The nonprofit is also a community developer, working with the state-funded Cal Home program, and also pulls assistance from different funding sources.
“For example, we administer the first-time home buyer program for Menifee, which uses home funding federal dollars, allowing up to $100,000 for a low-income borrower, and they can have up to $200,00 in down payment assistance,” he said.
They also leverage home dollars or CDBG for various cities in their development project, such as ten in San Bernardino where they take blighted difficult lots that bigger developers don’t want, and negotiate with the cities before the project starts to help get property in the hands of low-income people at 80% AMI or below.
Lately, they also leverage other forms of funding, with an additional $1 million recently received from the California Association of Realtors on housing affordability funds, offering $10,000 in closing cost assistance. That funding is not restricted at 80% AMI, but rather up to 120% of area median income.
He said applicants must be from a disadvantaged community, including persons of color, lgbtq veterans, and more.
The National Association of Realtors also reports discrimination in lending and that Black and Hispanic applicants experienced higher denial rates for mortgage applications compared to their white and Asian counterparts. Data from the Home Mortgage Disclosure Act (HMDA) reveals that mortgage applications were denied at a rate of 26% for Black and 22% for Hispanic applicants, in stark contrast to the 16% for white and 15% for Asian applicants.
In Orange County, Santa Ana City also wants to reach lower income residents to attend workshops that can help them into their first home.
City spokesperson Paul Eakins said the city is creating all types of new housing, which is a priority for their City Council. Last year, they approved an additional $3 million for their “My First Home” down payment assistance program.
“Given the competitive state of the housing market and the rising costs of both rent and home prices, every bit can help our families who are trying to get their foot in the door of their first home,” he said.
They are encouraging residents to learn more about their program and apply for an interest-free down payment loan in their next step to homeownership. He said in 2022 – 2023, the city awarded $2.5 million in down payment assistance to 23 families to purchase their homes.
According to the city’s website, the My First Home Program will offer down payment assistance loans to first-time home buyers to aid in the purchase of a home within the City of Santa Ana. Funds will be available on a first-come, first-served basis. A first-time home buyer may be eligible to borrow up to $120,000 with a 0% interest rate.
“We want to build generational wealth for the hard-working residents of Santa Ana, and homeownership can be a building block to reach that goal,” said Santa Ana Mayor Valerie Amezcua. “Santa Ana continues to lead the way in creating a wide variety of housing opportunities for our community.”
In Long Beach, city spokesperson Richard de la Torre said 22 homebuyers were assisted with grants and services, and they expect to assist about 70 more homebuyers with up to $25,000 in assistance. The program is seeing most homebuyers coming in, on average, with $5-7,000 out of pocket.
“Our assistance, which is a grant program and not a loan or mortgage service, provides $25,000 towards the downpayment, closing cost and, or, buying down the interest rate. Homebuyers can also combine our program with other programs for a greater benefit,” said De La Torre.
There is no minimum income to qualify, only a maximum income, but homebuyers need to qualify for the required appropriate mortgage, which is not determined by the program or the City of Long Beach.
“The program is designed to assist low- and moderate-income families earning up to 200% of the Los Angeles County Area Median Income (AMI) with purchasing their first home and building multi-generational wealth,” he said.
For example, a family of four earning up to $196,400 that has been pre-approved by a lender for a 30-year fixed mortgage loan, would qualify under the program.
“The City is excited to have been able to increase the income limits to 200 percent AMI, boost the grant amount from $20,000 to $25,000, and expand the program citywide to open this great opportunity for more first-time homebuyers in Long Beach and help them realize the dream of homeownership,” he said.
For more information on:
Long Beach programs see
https://www.longbeach.gov/lbcd/hn/homebuyer/
For Santa Ana, see
For San Bernardino, see
For NAR’s Snapshot of Race and Home Buying in America
https://www.nar.realtor/research-and-statistics/research-reports/snapshot-of-race-and-home-buying-in-america
Leave a reply
You must be logged in to post a comment.
