Waters, Green, Pressley, & Garcia Reintroduce Downpayment Toward Equity Act in Celebration of NHM
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In celebration of National Homeownership Month, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, along with Congressman Al Green (D-TX), Congresswoman Ayanna Pressley (D-MA), and Congresswoman Sylvia Garcia (D-TX), announced reintroduction of the Downpayment Toward Equity Act. This transformative legislation would help close the U.S. wealth and homeownership gaps by providing $100 billion in direct assistance to help first-time, first-generation homebuyers purchase their first home. As it stands, downpayment requirements and other upfront costs remain a barrier to entry for many, particularly younger people and people of color who have been historically excluded from homeownership opportunities.
For decades, homeownership has been the primary driver of household wealth in the United States. In fact, according to a recent Aspen report, homeowners are nearly 40 times wealthier than renters. Homeownership also consistently outperforms stocks and bonds as an investment vehicle, while offering the essential utility of housing families. Its returns make it more beneficial than renting for most. In addition, home equity provides economic security, serving as a cushion in times of crisis, like during a pandemic or a recession. According to the Urban Institute, targeting downpayment assistance to first-generation homebuyers, as defined in the bill, could reach 5 million eligible homebuyers who are disproportionately Black and Latino.
Despite these clear benefits, homeownership continues to slip further out of reach for working families, with the share of first-time homebuyers hitting an all-time low of 24% between 2023 and 2024. Today, the 30-year fixed-rate mortgage stands just under 7%, reflecting a significant increase over the past four years, while home prices have increased by over 57% since 2019. Unfortunately, these conditions have worsened under the leadership of President Trump, as economic anxiety is causing families to postpone major life decisions, including buying a home.
Specifically, the Downpayment Toward Equity Act:
» Provides up to $20,000 for first-generation homebuyers and up to $25,000 for socially and economically disadvantaged homebuyers, to cover downpayments, closing costs, and mortgage interest rate buydowns.
» Targets assistance to those most in need, including Black, Latino, and other historically marginalized communities, to help close the racial wealth and homeownership gaps.
» Makes eligible those with incomes up to 120% of area median income (or 180% in high-cost areas), including individuals whose parents or guardians have not owned a home in the past three years and individuals who have been in foster care.
» Requires homebuyer education and counseling to ensure sustainable homeownership and reduce risk of foreclosure.
» Allows funds to be used with FHA, VA, USDA, Fannie Mae, Freddie Mac, and other qualified mortgages. Administers funds through HUD and state agencies, with 75% of funds distributed by population, home prices, and racial disparities. The remaining 25% will be competitively awarded to community-based organizations.
» Mandates annual reports to Congress on program performance and outcomes, allowing up to 5% of funds for administrative costs.
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https://democrats-financialservices.house.gov/news/documentsingle.aspx?DocumentID=413555