It’s Black History Month! As a housing agency, it’s a great time to reflect on innovative ways to increase Black homeownership in Virginia. In 2022, White households had a homeownership rate of 75%, while Black households had a homeownership rate of 45% (PewTrusts 10/2022).
Let’s start by examining factors that contribute to the gap in Black homeownership rates. A household’s wealth is built by the family’s income, savings and assets. However, a family’s ability to build wealth is impacted by unemployment, education and income. In 2022, the median earnings for a Black family was $14,000 less than a White family. Black families face higher unemployment levels, but as the level of education increases, the chances of unemployment decrease. However, a college degree does not eliminate the wealth gap for Blacks (Federal Reserve District Dialogues, July 2022).
These statistics point to a larger need for Black homeownership opportunities. Homeownership builds wealth and provides financial stability. Home equity creates wealth for a large percentage of households. One solution to increasing Black homeownership opportunities is through the creation of down payment and closing costs assistance programs.
Virginia State University (VSU) is a historically Black university located in Petersburg, Virginia. VSU offers its employees $10,000 in matching funds to purchase a home within the school’s surrounding area of Petersburg and parts of the Ettrick community. This program is an example for other employers as it is an innovative way to support employee retention and benefit the local community.
“Our Home Assistance Payment Initiative (HAPI) program will have an economic and demographic impact on those communities we are part of.– Dr. Makola M. Abdullah, VSU President
Within the Virginia Department of Housing and Community Development (DHCD), there are four down payment assistance programs, each with a unique way to increase homeownership opportunities for first-time homebuyers. DHCD is working in conjunction with Virginia LISC to roll out a down payment assistance program, called WORTH Homeownership Opportunity (WHO). It’s a new program serving the Richmond region to assist Black, Indigenous and people of color (BIPOC) with down payment and closing cost assistance. The program will match participant’s savings and provide housing education and counseling. Participants can earn up to $10,000 in matching funds to use towards their down payment and closing costs. The home must be purchased within the program’s service area, and it is expected to launch spring 2023.
Here are other DHCD homeownership assistance programs.
Down Payment Assistance:
The HOMEownership Down Payment and Closing Cost Assistance (DPA) program provides flexible gap financing for first-time homebuyers. An eligible homebuyer may receive up to 10 or 15 percent (within established, approved areas by DHCD) of the sales price, plus up to $2,500 to pay for the cost of closing. The funds are a grant with an affordability period for the applicant to continue to occupy the home as their primary residence.
Virginia Individual Development Accounts Program:
The Virginia Individual Development Accounts (VIDA) program is similar to the WHO program but open to all eligible participants within the state. It’s a statewide program and has been revamped so that participants can now earn up to $10,000 in matching funds through the program to use towards their down payment and closing costs. Participants work through local VIDA intermediary sites to plan, save and educate their way to homeownership. The program is expected to launch spring 2023.
A Community Development Block Grant (CDBG) can be awarded to an eligible locality to implement a local VIDA program for small business development and homeownership opportunities. Savers are provided small business training or homeownership training. Their savings is matched up to $4,000 for their business or homeownership purchase. There’s currently a CDBG program in Floyd county with an upcoming program scheduled for the Bedford region.
Click here for more information on DHCD homeownership programs!
Photo Credit: Pittsburgh City Paper