Detroit downpayment assistance program: 3 mind-blowing facts
Buying a home as a first-time home buyer can be exciting as it is daunting. Fortunately, there are first-time home buyer programs like the Detroit downpayment assistance program to aid potential buyers with often overlooked costs — downpayment and closing costs. From shopping for homes to deciding whether to hire a realtor or real estate while finding a budget-friendly home that meets the buyer’s criteria, there are many things to consider.
Investing in Detroit just got a little easier now that the city of Detroit offers up to $25,000 in downpayment assistance for first-time home buyers to cover either a downpayment or the closing cost of purchasing a home. The purpose of this progressive initiative is to promote home buying in Detroit. Despite the Detroit housing market experiencing a hot period in 2021, the path to homeownership remains rocky for many Detroiters. According to Bridge Detroit, a University of Michigan analysis found that 15 years after the subprime mortgage crisis, the level of mortgages granted is still disproportionate to the rate of homeowners.
“We just didn’t experience a depression or a decline in values. We went all the way to the point where the market stopped working,” Chris Mueller, head author of the U-M analysis and a lecturer at the University of Michigan’s School of Business told Bridge Detroit.
The mortgage crisis ultimately snowballed into a flurry of foreclosures that left thousands of homes vacant and blighted. Fast forward to 2023, on the verge of a slowly shifting seller’s market, Detroiters have mostly become renters. The city launched the downpayment assistance program and other support resources like the ‘Rehabbed and Ready’ program to combat this cataclysmic shift in home ownership.
Who qualifies for the Detroit downpayment assistance program?
- Detroit residents who have lived in the city for the past 12 months.
- Detroit residents who haven’t owned a home in the past three years.
- Residents that make under $43,730 for a single person to a maximum of $151,680 for an 8-person household and less than 300% of the national poverty level.
While the application process is pretty straightforward, there are three mind-blowing facts to consider when qualifying for the Detroit downpayment assistance program.
1) Applicants can qualify if they lost their home to property tax foreclosure.
Eligible Detroit residents can also apply for the Detroit downpayment assistance program if they lost a home to property tax foreclosure between 2010 and 2016. Funds are available on a first-come, first-served basis, and all applicants must complete a Homebuyer education course, have a signed purchase agreement, and meet pre-qualification criteria by a lender.
2) Funds will not be disbursed directly to the applicant.
Detroit downpayment assistance recipients will not receive funds from the program directly. Instead, the funds will be made available at closing to pay for all associated fees such as prepaids, down payments, and closing costs.
3) Grant funds will depend on a variety of factors and will vary per homebuyer.
Several variables determine the amount received for every homebuyer approved by the downpayment assistance program. Funds do not automatically total $25,000 per applicant. The purchase price, closing costs, and interest rate buy-down affect the total grant funds paid out per family and cannot exceed 50% of the purchase price.
In summary, Detroit aims to rebuild homeownership post-recession and the COVID pandemic in the city one home at a time. Support programs and funds like the Dan Gilbert Foundation Rocket Community Fund and the Strategic Neighborhood Fund offer promising homebuyers a much-needed hand on the road to owning a residence in Detroit. The Detroit Downpayment Assistance program is one of many funding platforms lowering the bar of entry to more affordable housing in the city.