A new program from Champlain Housing Trust aims to help Black, Indigenous and people of color with down payments on their first home.
The New England Federal Credit Union has given the housing trust $3 million for the program.
“We did understand the challenges that the BIPOC community faces in homeownership,” said Bill Smith, chief retail and marketing officer at New England Federal Credit Union.
The program provides $25,000 in down payment assistance in the form of an interest-free loan forgivable after three years.
Recipients can use the money to buy any of the nearly 650 shared-equity homes Champlain Housing Trust owns or administers, CEO Michael Monte said.
Under a shared equity program, Monte said the housing trust can, for instance, take the Butternut condominiums in Winooski that it is building, appraised at $350,000 per unit, and sell them for $160,000 to $175,000. When the buyer sells the condo, the buyer keeps 25% of the appreciated value and Champlain Housing Trust keeps 75%, which it passes on in subsidies to the next homeowner.
“So essentially, our shared-equity homes become permanently affordable,” Monte said.
Champlain Housing Trust also plans to offer financial counseling and education, forgivable loans to people who improve their homes, and a program for Muslim buyers to get around religious restrictions on paying interest. The program, to be launched next month and developed by Timothy Carpenter, senior lending manager at Opportunities Credit Union, allows people to buy a home with the credit union, to pay rent, and to buy the credit union’s share over time.
Disparities in homeownership between races persist nationwide. In early 2022, 45.3% of Black households, 49.1% of Hispanic households and 59.4% of Asian households owned their own homes compared to 74% of white households, according to a report published Wednesday by the Joint Center for Housing Studies at Harvard University.
“High down payments are usually the biggest barrier to accessing homeownership for many households,” Alexander Hermann, one of the lead authors of the Harvard report, told VTDigger. “That’s one possible tool you could use to close longstanding homeownership gaps that persist by race and ethnicity across the country.”
A Champlain Housing Trust video citing U.S. census data shows that in Vermont, Black households are at a much greater disadvantage than in the rest of the country, with only 21.1% of Black households owning homes. Hispanic and Asian or Pacific Islander households, too, fare worse than in the rest of the country, with only 38.5% of Hispanic and 50.4% of Asian or Pacific Islander households owning their own homes, according to the Champlain Housing Trust data. 45.6% of American Indian households in Vermont own their own homes, the data shows. 72.5% of white households own their own homes, according to the housing trust.
Monte said three or four families are in the process of qualifying for the down-payment assistance program. He said he hopes Champlain Housing Trust hopes to help about 20 families a year with down payment assistance.
The Legislature funded and Gov. Phil Scott signed into law a program that provides the Vermont Housing Finance Agency with $1 million in grants to first-generation homebuyers, directing the agency to reach out to BIPOC homebuyers.
Champlain Housing Trust decided to target BIPOC homebuyers specifically.
“Often enough, there is a proxy for BIPOC homeownership that is first-generation homeownership,” Monte said. “We chose not to do that, because it really wasn’t specific enough for us.”
