Down payment assistance 'a gold mine' for first-time buyers 

Editor's note: This month marks the 55th anniversary of the landmark Fair Housing Act, but homeownership remains out of reach for many marginalized communities. Agents, lenders and other real estate professionals play a vital role in helping people get their foot in the door of a first home.

Down payment assistance programs can be crucial in helping first-time buyers make the leap to homeownership, but too many buyers — and agents — don't realize what's available.

"You have to do your homework," says San Diego Agent Destiny Roxa with the Dean Aguilar Group. She's also hoping to get help to purchase her first home. "The options are out there but not super widely broadcast to the average consumer."

"There are literally hundreds of DPA programs if one takes the time to simply sit down and Google it," says Ryan Weyandt, CEO of the LGBTQ+ Real Estate Alliance.

"Cities, counties, states and other local municipalities all offer down payment assistance grants and programs, some with repayment obligations down the line, and some simply free money for following a process," he says. "More often than not, a simple search will turn into a gold mine."

But it's a gold mine not enough people have a map to. The Urban Institute says 5.37 million Americans qualify for down payment assistance. But the National Association of Realtors says only 3-4% of recent homebuyers have taken advantage of these programs.

So how to get the word out? Portals like Realtor.com, Zillow and Redfin include tools that access information about more than 2,000 programs provided by Down Payment Resource. Buyers can click on the tools, enter some basic information and learn what programs might be available to them.

Realtor.com has gone a step further, donating the first $200,000 to the Homeownership Council of America to help launch the Equity Down Payment Assistance Program, says spokesperson Sara Wiskerchen. The portal also issued a "Closing the Gap" challenge to the industry, which led to a total of $400,000 in contributions.

Gabe del Rio, President & CEO of the Homeownership Council of America, says the program has already helped 10 buyers close and expects to serve about 60 more this year.

"It's all up to how much funding we have available from donors and matching lenders," he said. "Our work on special-purpose credit programs is touching thousands of underserved first-generation and first-time homebuyers this year and for years to come."

There are programs available with a variety of qualifications — from first responders to teachers. Roxas says that as a member of the Haida Tribe, she reached out to the Tribal offices in Ketchikan to confirm her eligibility for a special lending program she's hoping to use herself.

But the hodgepodge of private, local, state and federal programs can feel overwhelming. 

Adding to the stress, most programs don't have endless resources. In fact one of the most popular, the California Housing Finance Agency's Dream For All, just ran out of money. "They had $300 million," Roxas said. "Only about 2,000 different buyers will really be able to benefit from it — but it's great for the time being."

And DPA programs can take more time. "Keep that in mind when writing offers when there's low inventory," says Roxas, who adds that buying "out of season" may be a better bet for those using DPA programs.

Weyandt points out the power of partnering with "a knowledgeable lender who understands the community and has solutions and resources they can offer their clients to get them into a home," says Weyandt.

"This ends up being a huge tool for real estate agents, as they build trust with their lending partner and rely on them to assist their mutual clients in getting the deal done."

Education for would-be home buyers is critical. "The LGBTQ+ community notoriously is neglected when it comes to offering education or basic financial literacy and 'path to homeownership' awareness," Weyandt says.

"There is public perception, in general, that one needs 20% down to purchase a home," he says. "This myth often stands in the way of making a good renter into a great homeowner."