June is an exciting time for aspiring homeowners and those who already own their homes, as it marks National Homeownership Month in the United States. This annual celebration provides an opportunity to acknowledge the significance of owning a home, highlighting the values of stability, future investment and the realization of dreams. In addition, it is crucial to shed light on the vital role that affordable housing plays in making the dream of homeownership a reality for many individuals and families.
For generations, owning a home has held a significant place in attaining the American Dream, representing not just financial security, but also as a source of pride and personal achievement. Unlike renting, owning a home allows individuals to build equity and accumulate wealth over time. As property values appreciate, homeowners can benefit from the potential financial gains. This can be especially advantageous during retirement when individuals may choose to downsize or utilize their home’s value to supplement their income. Homeownership, therefore, offers a path to long-term financial security and the ability to leave a legacy for future generations.
But how attainable is homeownership for the Black community? Disparities in homeownership rates between Black and white residents are evident in Detroit. Recent data from the American Community Survey conducted by the U.S. Census Bureau in 2021 reveals that homeownership among Black Detroiters stands at 49.7 percent, while white residents have a higher homeownership rate, that of 57.9 percent.
According to a recent Zillow report, in comparison to any other city in the United States, homes owned by Black residents in Detroit experienced a remarkable increase in value, surpassing the growth of homes owned by white individuals. The report revealed that Black-owned homes in the city saw their value rise by more than 51 percent.
However, the same Zillow report also shed light on a concerning issue. It underlined the fact that Detroit has one of the highest mortgage denial rate for Black borrowers. The report indicated that the denial rate for Black mortgage applicants in Detroit stands at 18 percent, which is on par with New Orleans and higher than several other Midwestern cities such as Milwaukee (15 percent), Chicago (14 percent) and St. Louis (12 percent). These findings underscore the existing disparities in access to mortgage loans for Black individuals in Detroit despite the positive growth of home values in their communities.
Affordable housing plays a pivotal role in making homeownership accessible to a broader range of people and their families. Government programs, non-profit organizations and community initiatives strive to provide affordable housing options, such as subsidized mortgages, down payment assistance and rental assistance programs. These initiatives aim to bridge the gap between income levels and housing costs, helping individuals overcome financial barriers and achieve their homeownership goals.
Additionally, affordable housing not only benefits individuals and families but also strengthens communities and the economy. When people can afford suitable housing, they are more likely to invest in their homes, contribute to neighborhood improvement efforts and engage in community activities. This, in turn, leads to vibrant neighborhoods, increased property values and enhanced overall quality of life. Affordable homeownership also stimulates economic growth by creating jobs in the construction and housing industries, boosting local businesses and generating tax revenue.
City officials announced earlier this year a new initiative that allows residents interested in purchasing a home to apply for up to $25,000 in down payment assistance. The program, known as the Downpayment Assistance Program, has partnered with 13 banking institutions and aims to support renters in becoming homeowners. Mayor Mike Duggan emphasized that this initiative will not only safeguard individuals from escalating rental costs but also enable them to establish long-term family wealth. The program has been made possible through a $6 million allotment from the American Rescue Plan Act pandemic relief funds. Mayor Duggan expressed the significance of this endeavor, stating that it is the first time such an opportunity has been available in the past 25 years, and commended the collaborative efforts of all involved in making it a reality.
The down payment assistance program operates on a first come, first served basis and is primarily aimed at assisting renters. However, it is also open to individuals who lost their homes due to property tax foreclosure between 2010 and 2016 as a result of over assessments, and wish to purchase a new house.
Eligibility Requirements
- To be eligible for the program, applicants must meet the following criteria:
- Provide evidence of residing in Detroit for the last 12 months or demonstrate home loss due to tax foreclosure.
- Not been a homeowner within the past three years.
- Total household income does not exceed the specified income thresholds: $43,740 for a one-person household, $59,160 for a two-person household, $74,580 for a four-person household, $105,420 for a five-person household, $120,840 for a six-person household, $136,260 for a seven-person household and $151,680 for an eight-person household.
Utilization of Grant Money
- Recipients of the grant must utilize the awarded funds in the following manner:
- Occupy the purchased home as their primary residence for a minimum of three years after receiving the grant. Failure to meet this requirement will result in repayment on a pro-rated basis, depending on the duration of residency.
- Apply the grant towards the purchase of a home using either a purchase mortgage or a renovation mortgage.
- Ensure the purchased home meets code requirements through mandatory inspections.
The grant funds can also be used for the following purposes:
- Escrow deposits for property taxes.
- Closing costs.
- Interest rate and principal reductions.
- Application Process
To apply for the down payment assistance program, follow these steps:
- Select a lender from the list of participating companies, which include Bank of America, Chase, CIBC, Citizens, Fifth Third Bank, First Independence Bank, First Merchants Bank, Flagstar Bank, Huntington Bank, Independent Bank, Liberty Bank, PNC Bank and Rocket Mortgage.
- Applicants must be pre-qualified by their chosen lender.
- Individuals must find a house they wish to purchase.
Visit www.detroitdpa.org or contact the Wayne Metro Community Action Agency at 313-244-0274 to access the application process.