New program aims to help BIPOC homebuyers with down payments

The former Baymont Hotel in Essex has been renovated into rental apartments. A Champlain Housing Trust project, Susan’s Place was made possible with federal pandemic relief funds. Photo by Glenn Russell/VTDigger

A new program from Champlain Housing Trust aims to help Black, Indigenous and people of color put down a down payment on their first home.

The New England Federal Credit Union gave the housing trust $3 million for the program.

“We understand the challenges the BIPOC community faces when it comes to homeownership,” said Bill Smith, director of retail and marketing at New England Federal Credit Union.

The program provides down payment assistance of $25,000 in the form of an interest-free loan repayable after three years.

Beneficiaries can use the money to purchase one of approximately 650 shared-equity homes owned or operated by Champlain Housing Trust, CEO Michael Monte said.

Under a shared equity program, Monte said the housing trust can, for example, take the Butternut condominiums in Winooski it’s building, valued at $350,000 per unit, and sell them for between $160,000. $ and $175,000. When the buyer sells the condo, the buyer keeps 25% of the capital gain and Champlain Housing Trust keeps 75%, which it passes on as grants to the next owner.

“So essentially our shared homes become permanently affordable,” Monte said.

Champlain Housing Trust also plans to offer financial advice and education, forgivable loans to people improving their homes, and a program for Muslim buyers to bypass religious restrictions on paying interest. The program, to be launched next month and developed by Timothy Carpenter, senior loan manager at Opportunities Credit Union, allows people to buy a home with the credit union, pay rent and buy the credit union’s share popular over time.

Disparities in home ownership between races persist nationwide. At the start of 2022, 45.3% of black households, 49.1% of Hispanic households and 59.4% of Asian households owned their homes compared to 74% of white households, according to a report published Wednesday by the Joint Center for Housing Studies. from Harvard University.

“High down payments are typically the biggest barrier to homeownership for many households,” Alexander Hermann, one of the lead authors of the Harvard report, told VTDigger. “It’s a possible tool you could use to close the long-standing gaps in homeownership 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 much more disadvantaged than in the rest of the country, with just 21.1% of black households owning homes. Hispanic and Asian or Pacific Islander households also fare worse than the rest of the country, with only 38.5% of Hispanic households and 50.4% of Asian or Pacific Islander households owning their own homes, according to Champlain Housing Trust data. 45.6% of Native American households in Vermont own their own home, according to the data. 72.5% of white households own their 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 around 20 families a year with down payment assistance.

The Legislature funded and Governor 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 specifically target BIPOC homebuyers.

“Quite often there is a proxy for BIPOC homeownership which is first-generation homeownership,” Monte said. “We chose not to, because it really wasn’t specific enough for us.”

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