Homebuyer Assistance Programs Experience Quarterly Uptick

Down Payment Resource (DPR) has released its Q2 2023 Homeownership Program Index (HPI), which revealed a second consecutive quarterly uptick of 0.5% in the number of homebuyer assistance programs available to help people finance homes, raising the overall number of programs to 2,373.

“Marked growth in the number of agencies administering homebuyer assistance programs reflects how affordability challenges are driving demand for affordable pathways to homeownership,” said DPR Founder and CEO Rob Chrane. “These emerging community champions play a vital role in making home homeownership more accessible to LMI households and marginalized demographics who have lower rates of homeownership.”

Key Findings:

• Growth in programs that expand inventory options. In response to the dearth of affordable inventory, agencies continue to introduce programs that expand housing options for low-to-moderate income (LMI) homebuyers. Last quarter, 24 more programs introduced support for manufactured housing, an increase of 3.4%. Additionally, three programs that support multi-family purchases were introduced, bringing the number of programs that support two- to four-unit residential properties to 650.
• Growth in the number of agencies administering programs. As affordability continues to challenge LMI home buyers, 45 more agencies have stepped up to administer homebuyer assistance programs, a 3.9% increase over the previous quarter. Now, 1,323 agencies provide assistance to aspiring homeowners across the country.
• Municipalities administer the lion’s share of homebuyer assistance programs. Municipalities support 42.2% of homebuyer assistance programs, roughly double the 21.8% of programs supported by state housing finance authorities (HFAs) and 21.0% of programs supported by nonprofits, the second and third largest sources of homebuyer assistance, respectively.

“At the same time, agencies are responding to near historic low new listing figures by opening program support of manufactured and multifamily housing,” said Chrane. “This effectively expands inventory options for homebuyers that rely on these programs.”

Breakdown of New Programs

Here is a thorough breakdown of the homebuyer assistance programs added last quarter:

• By assistance type: Similar to last quarter, community seconds saw the largest growth, with 24 programs added. Four grants, four combined assistance programs, one deed program, seven BMR/resale programs, and six MCCs were also among the programs added.
• By region: There was a 1.18% increase in statewide programs, a 1.73% increase in programs supporting home purchases in defined locales, and a 6.85% increase in nationwide and multi-state programs. Programs supporting homebuyers in New Mexico saw the largest percent growth of any state, increasing by 21.43%.
• By funding source: Florida’s State Housing Initiatives Partnership (SHIP) programs saw the largest cumulative growth overall, with 17 programs added, a quarterly increase of 18.09%. Other funding sources that saw a notable increase were Native American Housing Assistance and Self-Determination Act (NAHASDA) block grants, which increased by 4.3%, and assistance backed by the Federal Home Loan Banks (FHLB), which increased by 4.76%.

Of the 2,373 homebuyer assistance programs:

• Some 82.5% of all programs are currently funded.
• An estimated 8.8% of all programs are currently inactive.
• Roughly 3.1% of all programs have a waitlist for funding.
• Approximately 5.6%% of all programs are temporarily suspended.
• Some 75.3% of programs in the database are for down payment or closing cost assistance.
• An overall 10.0% of programs are first mortgages.
• Roughly 3.6% of programs are Mortgage Credit Certificates (MCCs).

To read the full report, including more data, charts, and methodology, click here.