Is Down Payment Assistance the Answer to the Racial Wealth Gap?

Politicians have talked for years about the racial wealth gap and how to help overcome it with varying measures of both success and failure. Home equity accounts for nearly one quarter of net worth which as of 2019 for white families stood at 8 times that of black families and 5 times than Hispanic families. Increasing opportunities for home ownership is one way that this gap is seen to be addressed.  Down Payment Assistance (DPA) programs exist in approximately 2,500 active programs through roughly 1,300 public agencies already totaling about $1 billion dollars per year. 

The trick will be trying to figure out how to implement a Federal program that will either work in unison with or supersede these already in existence. DPA has become so integral already that in 2019 FHA loans equaled around 40% of those where DPA was used in the funding of those loans, with 15% coming from Government agencies and most of the balance coming in the form of gifts from eligible family members. There is certainly a place and an obvious need for DPA but it should not fall as a risk or a burden to taxpayers if the default rate on these loans becomes excessive, which is another one of those "tricks" that will have to become part of any legislation at the Federal level. 

If you're currently looking for a home and the down payment remains an obstacle as it is for so many, don't wait for Congress to enact legislation regarding DPA as it could be months or years before doing so. Instead, contact your trusted RealtorĀ® or Lender and find out which already existing DPA programs you may already qualify for in your area to take advantage of these historic low interest rates! Best of luck, and with this many programs available, chances are there's one for you too!

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