US Home Buyers Could Get $50,000 Down Payment Help: Who Qualifies | Today’s news
First-time home buyers in the United States could receive up to $50,000 in federal down payment payments under a bill being introduced by Democratic senators Jeff Merkley and Ron Wyden, Axios reported.
The Homeownership Promise Act would create a federal 5-to-1 matching program for eligible first-time buyers who save money for a down payment. The proposal comes as high mortgage interest rates and increased home prices continue to make home ownership difficult for many potential buyers.
How would a $50,000 down payment work?
Under the proposed legislation, the federal government would contribute $5 for every $1 saved by an eligible first-time home buyer, up to a maximum federal contribution of $50,000, the news site reports.
That means someone who saves $10,000 could get a $50,000 federal match.
Employers and nonprofits could also contribute to the buyer’s savings. However, money provided by employers or nonprofits would not qualify for the federal match.
Who would qualify?
The proposal would be available to eligible first-time homebuyers, with no income limit to receive the federal match.
However, there is a restriction on the property they can buy. Buyers would be limited to homes priced at or below the median home price in their local area.
Back-up savings would also have to be held at participating financial institutions certified by the US Treasury Department as Community Development Financial Institutions (CDFIs).
These include community development banks and credit unions, which generally focus on serving lower-income customers and underserved communities.
Why is the US considering the proposal?
The proposed relief comes as affordability remains a challenge in the US housing market. Rising mortgage rates have pushed up the cost of borrowing and pushed some potential buyers out of the market.
Congress passed a major bipartisan housing bill earlier this year, but the legislation did not come with direct funding and was largely aimed at encouraging more home building.
The Homeownership Promise Act would instead provide financial assistance directly to people trying to buy homes.
Merkley said the proposal would help restore homeownership prospects for working families by allowing Americans to save for a home.
The US had an $8,000 first-time buyer tax credit
The proposal also has precedent in federal housing policy.
After the 2008 financial crisis and the housing market crash, the US government offered an $8,000 first-time homebuyer tax credit, which was described as one of the most popular federal housing measures at the time.
The proposed Homeownership Promise Act would represent a much larger potential benefit, with federal assistance of up to $50,000.
