A new program has launched to help racial and ethnic minority groups in Iowa buy their first homes. The Minority Down Payment Pilot Program is part of a statewide investment in housing relief. It awards eligible applicants funds for down payments and closing costs.
The Iowa Finance Authority will be distributing about $1 million for the program. By applying for the Minority Down Payment Pilot Program, eligible Iowans can be offered a $5,000 down payment along with closing cost assistance. It can be paired with Iowa Finance Authority's other down payment programs (First Home Down Payment and Closing Costs Assistance grant or loan options). By pairing two of the programs, a household can apply for up to $10,000 for a down payment.
The financial assistance comes from federal funding of $100 million for COVID-19 relief. The number of Iowans it will help in the future is subject to funding availability.
Spokesperson Ashley Jared said the Iowa Finance Authority is partnering with about 400 lenders across the state to administer the assistance.
"We hope to really get the point across that homeownership is within reach. A lot of folks, there's a big misperception out there that you have to have a ton of money saved for a down payment. And these days, really, that's not true, depending on the loan type," Jared said.
Once Iowans are more secure in housing, Jared added, they can better focus on career growth and other ways to advance their life outcomes.
"It's kind of the best of both worlds, they can work with a lender in their area and benefit from this really, truly unique-to-Iowa, program," she said. “Homeownership is a major driver of wealth generation in the state and minorities are far behind others in homeownership. So that's really the goal of this program is to help spur that.”
Overall, housing experts have found it is more difficult for racial and ethnic minority groups to find affordable housing. Black Iowans are about three times less likely to own their homes than white Iowans. Previous IPR coverage found Iowa to have one of the biggest racial homeownership gaps in the U.S.
Jared said the program has started slowly, and they are trying to attract more applicants. Iowa Finance Authority is also working on translating the information.
“One of the kind of challenges we have with this audience is sometimes these potential homebuyers that could afford a home, may not know of the state or federal or other resources that are available to them," Jared said. "We're really out there trying to let people know that homeownership is within reach. And really, this COVID-19 pandemic over the last year and a half or so, has taught us that home really is everything."
Interested applicants will be required to fill out a self-attestation form to determine race/ethnicity. According to Jared, "immigration status eligibility will be determined per agency guidelines, dependent on loan type. Potential homebuyers are encouraged to contact their lender for more information."
The first step for potential homebuyers is to complete the eligibility quick check on Iowa Finance Authority's website. It will ask about different factors such as income, the house the homebuyer is interested in and which lender is in the area. After Iowans are considered eligible for the funds, they will work directly with their individual lender.
