Financial Assistance Available for Chicago’s First-Time Homebuyers via Freddie Mac and Rocket Mortgage Grant
Residents in the Chicago area looking to become first-time homeowners can now avail of a new down payment assistance credit, thanks to a collaboration between mortgage finance company Freddie Mac and mortgage lender Rocket Mortgage.
Freddie Mac recently rolled out a program named BorrowSmart Access. The initiative is designed to support first-time homebuyers in 10 metropolitan areas, including Chicago, by offering a $3,000 grant towards a down payment on a single-family home or two-flat. The condition is that they obtain their loans from Rocket Mortgage, which is the largest lender in the country. Freddie Mac, a major player in the housing market and a primary financier of mortgage loans, is actively looking to collaborate with other mortgage lenders soon.
The primary objective of BorrowSmart Access is to elevate the number of first-time homeowners in Black and Latino communities. These communities have historically encountered obstacles in entering the housing market due to racial discrimination. To qualify for the program, Chicago-area residents must earn no more than 140% of the area median income, have a credit score of 620 or higher, and attend a one-on-one financial counseling session arranged by Freddie Mac. According to Rocket Mortgage, for a family of four, the area median income limit would be $145,880, as per the Chicago Department of Housing’s April 2022 calculations.
Bill Banfield, executive vice president of capital markets at Rocket Mortgage, emphasized the rationale behind such programs, stating, “We aim to assist people in areas traditionally considered underserved markets. In essence, this means helping a high percentage of ready-to-buy individuals, often of color, climb the homeownership ladder and build generational wealth.”
The program’s initial stages are already indicating a positive impact on the community, with 15% of all applicants hailing from the Chicago region. Chicago’s selection as one of the 10 metro areas was based on its high density of Black and Latino potential buyers meeting the program’s qualifications and the region’s above-national-average availability of housing stock, said Danny Gardner, a senior vice president of community engagement at Freddie Mac.
In Chicago, Gardner revealed that there are approximately 1.2 million “mortgage-ready consumers” aged 45 or below, comprising roughly 100,000 Black families and 300,000 Latino families. He explained, “We believe it is an opportune market to promote homeownership and provide assistance to overcome the biggest hurdles for new homebuyers – funds for down payment and closing costs.”
Rocket Mortgage has also introduced Purchase Plus in December, a program offering up to $7,500 towards mortgage costs to help first-time homebuyers in six cities, including Chicago. Additionally, local mortgage lenders like Neighborhood Housing Services of Chicago and the Illinois Housing Development Authority offer similar grants for first-time homebuyers.
However, despite these programs, the challenging housing market and the persistent racial gap in homeownership could mean that these initiatives may not be enough or might not last. Therefore, prospective homeowners should consider taking advantage of these programs while they’re available.