Bill offers first-time buyers up to $25K for down payment

A bill reintroduced in the House of Representatives could offer relief for millions of Americans struggling to afford their first home.

The Downpayment Towards Equity Act, introduced by a group of Democrat lawmakers led by Rep. Maxine Walters D-Calif, would offer $100 billion in grants to help new homebuyers purchase their first home. The bill's sponsors described it as a key step in helping younger and minority buyers get their foot in the door in what has become an increasingly unaffordable housing market, as well as help address what they see as systemic racial inequalities in home ownership.

"Homeownership is a cornerstone of the American Dream and the most powerful tool for building generational wealth," Rep. Walters said in a statement. "For too long, families of color and first-generation buyers have faced insurmountable barriers to owning a home due to predatory lending, high downpayment requirements, and increasing home prices."

If enacted, the bill would give eligible first-time homebuyers up to $20,000 to cover things like downpayments and closing costs. Homebuyers deemed "socially and economically disadvantaged" could qualify for up to $25,000 in grants. Applicants would have to make no more than 120% of the area median income. The grants could only be used for qualified mortgages, such as those covered by Fannie Mae, Freddie Mac, or other government-backed loans.

Supporters also say the bill is an important step in addressing long-standing problems with housing inequality, including racial discrimination and redlining.

"With Black and brown families historically denied the opportunity to own homes and build wealth, our bill will empower first-generation homebuyers to access robust homeowner assistance and build wealth," said Rep. Ayanna Pressley, D-Mass., who co-sponsored the legislation.

Multiple housing groups have come out in support of the bill, including the National Fair Housing Alliance, the National Council of State Housing Agencies, and National Association of Realtors.

"This bill has the potential to be a meaningful step toward addressing long-standing disparities in wealth and homeownership, while expanding access for first-generation buyers," said Shannon McGahn, the executive vice president and chief advocacy officer at NAR, in a statement. 

The bill comes as home ownership continues to move further out of reach for many Americans. The average home sales price hit a record $400,266 last week, according to Redfin, and a report from real estate analyst ATTOM found that home affordability had fallen in nearly every county it tracked. Since 2022, the median home price has jumped 55.7% while wages have only increased 26.6%, according to their report. And as older folks plan to stay in their current homes into the foreseeable future, many millennials and Gen Z are pessimistic about ever owning a home, with more than a third saying the idea is "just a dream," according to one survey.

While laws like the Fair Housing Act and Equal Credit Opportunity Act explicitly prohibit lenders from discriminating based on race, religion, sex, and other protected characteristics, housing advocates point to complaints of racial bias from appraisers and lenders. The National Fair Housing Alliance collected more than 34,000 complaints of housing discrimination across the country in 2023, up 3.5% from the year before. 

At the same time, the funding bill currently being debated in Congress slashes funding to many fair housing programs at the Department of Housing and Urban Development, including cutting the department's Office of Fair Housing and Equal Opportunity by nearly a third and eliminating a range of other grants to local agencies.