Freddie Mac and Rocket Mortgage Extend Grants to First-Time Homebuyers in Chicago Area
Freddie Mac and Rocket Mortgage have teamed up to offer a new down payment assistance credit to Chicago, Illinois-area residents who are looking to buy their first home. Freddie Mac’s program, BorrowSmart Access, offers a $3,000 grant towards a down payment on a single home or two-flat to first-time homebuyers in 10 metropolitan areas, including Chicago. This program aims to increase the number of first-time homebuyers in Black and Latino communities, which have historically faced barriers to entry due to racial discrimination. To qualify, Chicago-area residents must make no more than 140% of the area median income, have a credit score of 620 or higher, and go through a one-on-one financial counseling session organized by Freddie Mac.
The area median income limit would be $145,880 for a family of four, according to the Chicago Department of Housing’s calculations as of April 2022. So far, 15% of all applicants for the program have come from the Chicago region, indicating that the program is having a positive effect on the community, even in its early stages.
Danny Gardner, a senior vice president of community engagement at Freddie Mac, shared that there are about 1.2 million “mortgage ready consumers” in the Chicago area at or below age 45, about 100,000 of which are Black families and 300,000 of which are Latino families. Gardner believes that this program is an opportune market to promote the opportunity of homeownership and provide some assistance to what we know to be the biggest challenge for new homebuyers, which are funds for down payment and closing costs.
The $3,000 down-payment-assistance credit is meant to serve as one piece of a larger puzzle of financial assistance sources offered by lenders and mortgage financers to first-time buyers, Gardner said. Rocket Mortgage also launched Purchase Plus, another program aimed at helping first-time homebuyers in six cities, including Chicago, by offering up to $7,500 to use toward mortgage costs. Local mortgage lenders such as Neighborhood Housing Services of Chicago and the Illinois Housing Development Authority have similar grants for first-time homebuyers.
However, the Chicago region has one of the largest racial gaps in homeownership among the country’s largest metropolitan areas, with homeownership rates hovering around 72% for white households, 53% for Latino households, and 40% for Black households. The challenging housing market has also made it difficult for first-time homebuyers to afford homes, with higher mortgage rates and home prices, and lower levels of inventory.
Real estate broker Naja Morris believes that the program could offer more support to underserved communities, but it often feels as if it’s not enough. Morris is concerned that the program may not stick around, as there is a bit of a sense of urgency. If somebody is looking to buy a home, they should take advantage of the program now, according to Bill Banfield, executive vice president of capital markets at Rocket Mortgage.