New report highlights down payment programs to assist first-time buyers

by Chicago Agent

By Kaylee Palak

First-time homebuyers might be surprised to learn that even in these tough economic times, there are thousands of down payment programs available to them. That’s according to Atlanta-based Down Payment Resource, a nationwide database for homebuyer programs, which recently released its Third Quarter 2020 Homeownership Program Index.

Within the HPI, a whopping 2,340 programs are available, with over 81% of those programs containing available funds for eligible homeowners.

Although there’s been a slight and mostly temporary drop in available programs at the city and county level, state housing finance agencies, which comprise nearly 24% of all programs, have not closed or paused business during the COVID-19 pandemic. the report noted.

Nearly 80% of the programs in the database offer down payment or closing cost assistance, and many have actually increased the amount of down payment of closing cost assistance available. Some 65% of the DPAs include payment deferral for some period of time, while another 44% are partially or fully forgivable. Additional programs offer things matched savings plans and Housing Choice Vouchers.

“More often than not, we are hearing that state housing finance agencies are doing as much or more business than they were at this time a year ago, and in a number of cases, they are doing more, said Stockton Williams, executive director of the National Council of State Housing Agencies, in the report. “A handful of state HFAs have even told us that they have had record production in recent months.”

That’s good news for millennials. According to one recent report, 45% of millennials (ages 23 to 38) cite cost of living as holding them back from buying a home, compared with just 38% of Gen Xers (ages 39 to 54) and 31% of baby boomers (ages 55 to 73). That same report noted that 33% of millennial homeowners say they used a down payment assistance program or grant, compared with 27% of Gen Xers.

Although forbearance claims are slowing after the initial chaos of COVID-19, the Down Payment Resource report noted that delinquency rates continue to rise. Even without the dark cloud of the pandemic, cost of living and down payments were always a huge problem for potential homebuyers.

“The last several months have been a tumultuous time for the mortgage finance system and everyone who is involved with providing housing lending,” Williams added. “There have been lenders who have pulled back from originating loans for low- and moderate-income borrowers for a variety of reasons, including general economic stress, or pivoting to do more business in refinances since rates are so low. There is also a lot of concern, which, frankly, state HFAs share, about some of the actions FHFA, FHA, Fannie, and Freddie have taken and not taken. Those have all contributed to uncertainty in the markets.”

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