New Down Payment Assistance Program for up to 20% Down?!

INTRODUCTION:

In our latest podcast episode, I dive into a groundbreaking initiative designed to rectify historical housing injustices: the Covenant Homeownership Program in Washington State. I was thrilled to have Brian LaFlame join me to discuss this revolutionary program that aims to make homeownership more accessible for marginalized communities. In this comprehensive guide, we break down the program's benefits, eligibility criteria, and its broader impact on the real estate landscape.

?? Did you miss our LinkedIn/YouTube live session? Catch the full video for a comprehensive dive into these topics below!

The Covenant Homeownership Program, launched on July 1st, 2023, is an outcome of the Covenant Homeownership Act of 2023, a bipartisan effort in Washington State aimed at addressing historical housing discrimination. This initiative offers up to 20% down payment assistance and 0% interest second mortgages to cover closing costs. Funded by a $100 document recording fee on real estate transactions, this program is a game-changer for many who have been shut out of the housing market for decades.

One of the standout features of this program is its ability to significantly increase buying power. By providing a 20% down payment, it eliminates the need for mortgage insurance, leading to lower monthly payments and higher pre-approval amounts. This is especially beneficial for individuals and families who earn below 80% of the area median income, as it can lead to even more savings. This initiative is not just about providing financial assistance; it’s about building generational wealth for historically marginalized communities.

Understanding the historical context is crucial to appreciating the significance of the Covenant Homeownership Program. The Federal Housing Authority (FHA) and the Department of Housing and Urban Development (HUD) have long played roles in making homeownership accessible to low and moderate-income individuals. However, the practice of redlining, which legally excluded certain communities from the housing market, has left lasting scars. This program is a step towards rectifying these injustices by offering substantial financial support to those who have been historically marginalized.

The current real estate market dynamics further highlight the importance of this program. Despite high interest rates, real estate prices have increased by 6.3% year-over-year, and the market remains undersupplied. Low inventory and sustained demand continue to drive prices up, making it even more challenging for first-time homebuyers to enter the market. The Covenant Homeownership Program provides a much-needed lifeline, offering an opportunity for marginalized communities to own homes and build equity.

One of the key takeaways from my discussion with Brian LaFlame is the program’s focus on specific racial and ethnic groups who lived in Washington before April 1968. These include Black, Hispanic, Native American, Alaskan Native, Native Hawaiian, or other Pacific Islander, Korean, or Asian Indian communities. The eligibility criteria also consider income levels, requiring applicants to make 100% or less of the area median income for the county in which they are buying. This targeted approach ensures that the assistance reaches those who need it the most.

In addition to the down payment assistance, the program also covers standard buyer-side closing costs, which can be up to 3% of the purchase price. This further reduces the financial burden on homebuyers, making the dream of homeownership more attainable. The 0% interest second mortgage is deferred until the homeowner sells the house, refinances, moves out, or pays off the loan in 30 years. This deferred payment structure provides additional financial flexibility for homebuyers.

Another important aspect of the Covenant Homeownership Program is the requirement to work with a Washington Housing Finance Commission-trained loan officer and a Covenant Home Program-trained loan officer. This ensures that applicants receive expert guidance throughout the process, maximizing their chances of successfully securing a home loan. While the program is currently limited by the availability of funds from the document recording fees, it remains a vital resource for those who qualify.

We also touched on the broader implications of this program for the real estate market. By increasing homeownership rates among marginalized communities, the Covenant Homeownership Program helps to create a more equitable and inclusive housing market. It also addresses the long-term impact of historical housing discrimination, providing a pathway for building generational wealth and fostering economic stability.

As we wrapped up our insightful discussion, we explored the ongoing trends in the real estate market. Despite the challenges posed by high interest rates and low inventory, the demand for housing remains strong. This underscores the importance of initiatives like the Covenant Homeownership Program, which provide essential support to those who have been historically excluded from the housing market. We also debunked the myth that a 20% down payment is necessary to buy a home, highlighting the various assistance programs available to prospective homebuyers.

In conclusion, the Covenant Homeownership Program is a significant step towards addressing historical housing injustices and making homeownership more accessible for marginalized communities in Washington State. By offering up to 20% down payment assistance and 0% interest second mortgages, this initiative provides a powerful tool for building generational wealth and fostering economic stability. I encourage you to explore this program and take advantage of the opportunities it offers.

I hope you found this episode both informative and inspiring. As always, I appreciate your support and look forward to bringing you more valuable insights in future episodes. Special thanks to Brian LaFlame for sharing his expertise and to all of you for tuning in!

*PLEASE reach out if you would like to learn more about this AMAZING Washington State 20% Down Payment Assistance program opportunity to see if you would qualify!*

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