New $6 Million Initiative Strives to Turn Detroit Renters into Homeowners
Detroit — In an effort to bolster homeownership, city leaders in Detroit announced a new initiative on that will provide up to $25,000 in down payment assistance to local residents seeking to buy a home.
The Downpayment Assistance Program, a collaborative endeavor involving 13 banking institutions as partners, has a dual purpose: to turn renters into homeowners and to shield them against escalating rents. Moreover, the program seeks to assist in building generational family wealth, as emphasized by Mayor Mike Duggan.
This initiative receives its funding from a $6 million allocation from the American Rescue Plan Act pandemic relief funds. “This is the first time a program like this has been offered in 25 years, and given the complexity of implementing such a scheme, it required all parties to work closely together. But now, we are open,” Duggan announced during a briefing at Detroit Public Safety Headquarters.
The inception of this program was driven by the recommendations of District 4 Council Member Latisha Johnson. It forms part of the ambitious $203 million Affordable Housing Plan that council members and Duggan unveiled back in July.
Describing the potential impact, Johnson, who grew up in a large family on the east side of Detroit, noted, “This program will set hundreds of Detroit families on the path to a more secure life.” She added that, “Having a place to call home creates a sense of security in the present while simultaneously paving the way for future generational wealth. The provision of $25,000 will make homeownership significantly more attainable.”
Mayor Duggan referenced a recent Zillow report in his State of the City address earlier this month, highlighting that Detroit leads the country in value gain for Black-owned homes compared to White-owned homes. According to the report, Black-owned homes in Detroit saw a remarkable increase of more than 51% in value.
However, the same Zillow report revealed a less encouraging statistic: Detroit has one of the highest mortgage denial rates for Black borrowers in the country. In Detroit, the denial rate stands at 18%, equivalent to New Orleans and higher than other Midwestern cities such as Milwaukee (15%), Chicago (14%), and St. Louis (12%).
“We have labored tirelessly to improve mortgage availability since the financial crash, where we saw a measly 300-400 mortgages a year issued citywide,” shared Duggan. “In 2015, I had a discussion with President Obama, presenting the clear disparities in Detroit and the suburbs, along with discriminatory practices in how appraisals were being handled. This national issue was addressed then, and now we’re confronting it at a local level.”
As for who qualifies for the down payment assistance, Detroit residents must provide evidence of having lived in the city for the past 12 months, complete with proof of rent and utility payments. The program is not open to current homeowners or anyone who has owned a home within the last three years.
The program is designed to accommodate between 240 to 400 applicants on a first-come, first-serve basis. Mayor Duggan is optimistic about the program reaching its full capacity swiftly.
Residents will have the option to move into a home that is already up to code or use a renovation mortgage to purchase a home from the land bank and undertake self-renovations.
The eligibility for the program is determined by income, which must not exceed 300% of the poverty level. This is broken down into the following income categories:
- A single person earning less than $43,740 annually
- A couple earning less than $59,160 annually
- A three-person household earning less than $74,580 annually
- A four-person household earning less than $90,000 annually
- A five-person household earning less than $105,420 annually
- A six-person household earning less than $120,840 annually
- A seven-person household earning less than $136,260 annually.
