Buying a home for the first time is a major decision, and navigating the homebuying process can be really challenging. But it can be especially difficult for people of color, who have historically faced barriers to mortgages and have been denied equal access to homeownership. For evidence, look no further than the Black-white homeownership gap. In the Kansas City metropolitan area, the rate of minority homeownership trails white households by approximately 30 percentage points according to a U.S. Department of Housing and Urban Development analyses of 2021 U.S. Census data.
Beyond the racial homeownership barriers, purchasing and maintaining a home can be prohibitively expensive, especially for those who are trying to save for a down payment while paying an exorbitant rent. Almost 22 million renters nationally pay more than 30% of their income in rent, according to an analysis by the Harvard Joint Center for Housing Studies. This escalating rental burden, paired with high housing costs and high interest rates, has locked too many people out of the stability of homeownership and the wealth-building power it provides.
As the Biden-Harris administration has sought to turn the tide to bring costs down, we have also taken several steps to open doors of opportunity for all through HUD and the Federal Housing Administration. For decades, the FHA has offered mortgage insurance programs that are tailored to meet the needs of low- and moderate-income homebuyers, and it has served nearly three times as many Black borrowers and twice as many Hispanic borrowers than the rest of the market. More recently, in fact, the FHA has made a host of changes to its programs under the Biden-Harris administration that have enabled more than 2 million people to become homeowners for the first time.
For one, the FHA lowered its annual mortgage insurance premium last year by 35%, which has saved hundreds of thousands of borrowers almost $600 million collectively in just the first year of their mortgages. Under this administration, we have also changed the way student loan debt is calculated in FHA underwriting, giving people with student loan debt more opportunities to qualify for an FHA-insured mortgage.
Another major change we made is an enhancement to how the FHA determines a borrower’s creditworthiness, which has boosted the chances that people who can demonstrate a consistent record of on-time rental payments will qualify for an FHA-insured mortgage. This policy change is already making a difference for first-time homebuyers with lower credit scores and less wealth, and it has been particularly helpful in allowing Black women to achieve homeownership.
In addition to making homeownership more accessible, we are also working to make potential homebuyers more informed about FHA products. There is a lot of misinformation about FHA programs floating around, but the truth is that they are reliable and secure products that allow millions of people to become homeowners every year, including those with less-than-perfect credit and people who don’t have a 20% down payment. FHA loans require only a 3.5% downpayment, provide flexible underwriting for borrowers with imperfect credit, and are available to finance homes that need repairs, manufactured homes and other types of housing.
If you’re still unsure of where to begin, there are HUD-approved housing counselors across the country who are hard at work every day helping people navigate the process and find grants, loans and assistance that can help them reach their dreams of homeownership.
June is National Homeownership Month. If you are ready to buy a home, I encourage you to visit HUD.gov/MakeHomeTheGoal to find a housing counselor and learn more about how HUD can help you become a homeowner. Also, if you think that you have experienced discrimination that is unfairly keeping you from becoming a homeowner, please contact HUD’s Office of Fair Housing online at HUD.gov/FairHousing or call us at 800-669-9777.
Ulysses Clayborn is regional administrator for the Great Plains office of the U.S. Department of Housing and Urban Development covering the states of Iowa, Kansas, Missouri and Nebraska. He is a resident of Kansas City and can be reached at (913) 551-5462.
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