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Homeownership has long been an important way to build wealth and achieve the American dream. Unfortunately though, not all American families have historically had the same access to that dream. Institutional racism, exclusion from lending, lack of resources and other barriers have made homeownership among minorities a significant struggle over the years, and the fallout remains apparent to this day.
White Americans have had a nearly 70 percent homeownership rate since 2017. For Black Americans that figure has been about 30 percentage points lower, sitting at just over 41 percent for the same time frame, according to a 2022 National Association of Realtors (NAR) report entitled Snapshot of Race and Home Buying in America. And according to a report from the National Association of Hispanic Real Estate Professionals (NAHREP), the homeownership rate for Hispanic Americans hovered slightly above 47 percent until 2021, when it rose to 48.4 percent.
“For the past century, people of color have sought homeownership and often met the qualifications for homeownership, but encountered discrimination from institutions,” says Bryan Green, NAR’s vice president for policy advocacy. “It’s that history and other exclusion — from jobs, opportunities, and mainstream life — that created the economic and social disadvantages that the country seeks to overcome.”
For the past century, people of color have sought homeownership and often met the qualifications, but encountered discrimination from institutions.
— Bryan GreenVice President for Policy Advocacy, National Association of Realtors
In recent years, programs designed to provide education about real estate purchases and assist low-income and first-time homebuyers with financing have helped minorities narrow the homeownership gap.
Homeownership among Hispanic Americans has been experiencing an upward trend over the past few years. However, there are still many challenges facing this group of buyers.
Hispanic homeownership trended downward for many of the past 10 years. Then the trend began to reverse course and climbed back up to 47.5 percent in 2019, equal to what it had been in 2010. In 2021, it reached 48.4 percent.
Homeownership in America in general has been on the rise, according to NAR. Americans are far more likely to own a home now than a decade ago, with 6.5 million more homeowners in 2020 than there were in 2010. White Americans still lead the pack in homeownership percentage, according to NAR’s data:
There are many more programs available today than in past years for homebuyers who need some help to navigate the real estate journey successfully. These programs, which offer education, down payment or closing cost assistance, are offered around the country and many are often aimed at first-time homebuyers. State and municipal governments frequently offer programs of their own.
“Hispanic buyers tend to trend younger and are more likely to be first-time buyers,” says Manny Garcia, a population-science researcher at Zillow. ”In every single county in the United States, there is at least one type of assistance program that first-time buyers can access.” Many community banks and credit unions also offer such programs, Garcia notes.
Yet another important place to check is your local housing authority, says Daryl Fairweather, chief economist for Redfin. “The local housing authority will have information about the different types of programs out there, so they are often the best place to start,” she says.
Here are some of the many programs available:
A Special Purpose Credit Program, or SPCP, is any loan program that has been specifically designated to meet the special needs of economically disadvantaged groups, including groups based on race and ethnicity, national origin, location or gender, according to NAHREP. Chase and TD Bank both offer examples of SPCP programs: Chase’s provides down payment and closing cost assistance, while TD’s offers mortgages for targeted areas.
This organization sponsors the HCA Equity DPA (which stands for Down Payment Assistance), a down payment and closing cost assistance program. The Equity DPA is aimed specifically at low-income BIPOC buyers.
The Washington, D.C., organization Homes by CFE’s DPA program assists Hispanic, Latinx and Black buyers in our nation’s capital. The program provides a second mortgage of as much as 20 percent loan-to-value ratio for low- to moderate-income borrowers. Their goal is to help prospective buyers break the cycle of renting and achieve affordable homeownership.
A variety of conventional financing programs provide low down payment loan options for borrowers that are more affordable than typical loans and require just a 3 percent minimum down payment. Some examples include the Conventional 97 mortgage, the HomeReady mortgage, the Home Possible mortgage and the HomeOne mortgage.
Aimed at borrowers with lower credit scores, these loans insured by the Federal Housing Administration are open to borrowers with a minimum credit score of 580. FHA loans also require just a minimal down payment of 3.5 percent.
According to the U.S. Census Bureau, the Hispanic or Latino population increased from 50.5 million, or 16.3 percent of the U.S. population, in 2010 to 62.1 million, or 18.7 percent of the country’s population, in 2020.
The homeownership rate in America was 65.5 percent as of 2020, according to NAR data.
Homeownership is associated with both economic and social benefits. Owning a home allows for building wealth. In fact, according to NAR, the net worth of a homeowner was about $300,000 in 2021, while the net worth of a renter was just $8,000. Owning your own home is associated with a variety of additional benefits as well, including better educational and health care outcomes, higher participation in civic and volunteering activity and lower crime rates.
Historic exclusion from mainstream job and housing opportunities have created many of the social and economic disparities we see in this country today, says Bryan Green, NAR’s vice president for policy advocacy. “For the past century, people of color have sought homeownership and often met the qualifications for homeownership, but encountered discrimination from institutions,” Green says.
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