Breaking Down Barriers to Homeownership

As an affordable housing solutions organization, we’ve seen firsthand the challenges that many underserved communities face when it comes to achieving the dream of homeownership. From low credit scores to a lack of savings for a down payment, the obstacles can seem insurmountable. But I’m here to tell you that there are innovative solutions emerging that are helping to bridge the gap and make homeownership a reality for more and more people.

One such solution is the small-dollar loan credit-building program that our organization, Homewise, recently launched with the help of a $1 million philanthropic investment from JPMorgan Chase. The idea is simple: we provide our clients with small loans that they can use to build up their credit scores while also saving money for a down payment. It’s a win-win that tackles two of the biggest barriers to homeownership.

But Homewise isn’t the only one thinking outside the box. Across the country, innovative organizations are coming up with new and creative ways to help underserved populations become homeowners. From community land trusts to shared equity models, the possibilities are endless.

Addressing the Racial Homeownership Gap

One of the key drivers behind these innovative homeownership models is the need to address the persistent racial disparities in homeownership rates. In New Mexico, for example, the homeownership rate among Native American and African American households is significantly lower than that of white non-Hispanic households.

“Owning your own home is critical for building wealth and achieving financial stability, and is one of the most significant opportunities to close the racial wealth gap for Black communities,” says Bishop David C. Cooper, President of the Ministers Fellowship of Albuquerque & Vicinity, who is partnering with Homewise on their credit-building program.

It’s a sentiment that echoes throughout the affordable housing community. Stable, affordable homeownership is not just a personal goal, but a vital tool for building generational wealth and closing the persistent gaps that have long plagued underserved communities.

Innovative Models in Action

So, what do these innovative homeownership models look like in practice? Let’s take a closer look at a few of the most promising approaches:

Community Land Trusts

In a community land trust, a nonprofit organization owns the land and leases it to homeowners, who then own the buildings on the land. This helps to keep the homes affordable in perpetuity, as the land value is separated from the home value. It’s a model that has been particularly effective in urban areas with skyrocketing land prices.

Shared Equity Homeownership

Shared equity models involve multiple parties – like the homeowner, a nonprofit, or a government agency – sharing in the ownership and appreciation of a home. This can make homeownership more accessible for low-to-moderate income families by reducing the upfront costs and ongoing expenses.

Employer-Assisted Housing

Some employers are getting in on the homeownership game by offering their employees assistance with things like down payments, closing costs, or even mortgage payments. It’s a win-win, as it helps the employer attract and retain talent while also supporting their employees’ financial wellbeing.

Cooperative Housing

In a cooperative housing arrangement, residents collectively own and manage their housing, rather than individual homeownership. This can provide more affordable and stable housing options, particularly in high-cost urban areas.

The beauty of these models is that they’re not one-size-fits-all. Different communities have different needs, and these innovative approaches can be tailored to address those specific challenges. The key is finding the right fit for the local context.

Overcoming Systemic Barriers

Of course, these innovative homeownership models aren’t just about coming up with creative solutions. They’re also about tackling the deeper, systemic barriers that have long prevented underserved populations from achieving the dream of homeownership.

Take the issue of credit scores, for example. As Homewise CEO Mike Loftin notes, “Debt-to-income ratio and credit score are the most frequently cited reasons for mortgage denial.” That’s why their small-dollar loan program is so important – it provides a pathway for clients to build up their credit scores and become mortgage-ready.

But it’s not just about credit scores. Lack of savings for a down payment is another huge obstacle, one that the Homewise program also aims to address through matched savings accounts. And then there are the broader systemic issues, like the shortage of affordable housing units and the persistent racial wealth gap, that these innovative models are trying to tackle head-on.

It’s a daunting challenge, to be sure. But the organizations and communities I’ve encountered are up for the fight. They’re rolling up their sleeves and getting to work, one innovative solution at a time.

A Brighter Future for All

At the end of the day, my hope is that these innovative homeownership models will help to create a more equitable and inclusive housing landscape – one where the dream of homeownership is within reach for people of all backgrounds and income levels.

Because let’s be honest, owning a home isn’t just about having four walls and a roof over your head. It’s about building generational wealth, creating stability for your family, and planting roots in a community. And everyone deserves that opportunity, regardless of their zip code or the color of their skin.

So, if you’re part of an underserved community and have been feeling like homeownership is out of reach, I encourage you to explore the innovative solutions that are out there. Whether it’s a community land trust, a shared equity model, or a credit-building program like the one at HACC Housing, there may be a path forward that you haven’t considered yet.

The road to homeownership may not be easy, but with the right support and a little bit of creativity, I believe it’s a journey that more and more people will be able to take. And that’s a future that’s worth fighting for.