Helping more people become homeowners faster is the goal behind a new partnership between United Way of Frederick County and the Frederick County Department of Housing and Community Development.
The Prosperity Savings Homebuyer Program offers a combination of zero-interest loans and grant funds to help first-time homebuyers pay upfront costs and continued mortgage payments on their new homes. The new program expands eligibility criteria and funding, according to Malcolm Furgol, United Way’s community impact director.
Specifically, the new program ups the income threshold for prospective participants based on the “survival budget” determined in the 2016 ALICE report by United Ways of Maryland.
The report, which highlights the plight of people who earn above the poverty level but still struggle to afford basic necessities, offered its own cost-of-living calculation based on market conditions, growth rates, demographic realities and costs of living in individual states, counties and even municipalities. Cost-of-living thresholds were calculated with 2014 U.S. Census Bureau estimates and 2016 data from federal and state agencies, the report stated.
Furgol named the report as a catalyst for changing the income guidelines.
“What we realized is, the cost of living is so high that even if you’re doing pretty well, you still can’t afford to pay some of your basic bills and expenses,” he said.
Under new income caps, a single person earning up to $32,480 can qualify for the homebuyer program. For a family of four, two adults and two children, the income cap is $75,732. The previous income eligibility criteria, equal to 200 percent of federal poverty level, capped income at $24,280 for a single person or $50,200 for a family of four, based on the 2018 federal poverty guidelines.
Prospective participants must also work at least a part-time job and have a net worth below $15,000, excluding one vehicle and retirement accounts, to qualify. First-time homebuyers are defined as those who have not owned a house in the last three years.
Those who meet these qualifications will receive a 4-to-1 match on money invested into United Way’s Prosperity Savings Account. The matching funds, for $8,800 based on a $2,200 participant contribution, come from county revenue collected from developers that choose to pay a fee instead of building the requisite affordable housing in their projects, according to Furgol.
United Way will contribute up to $3,400 in foreclosure prevention funds, available for the first three years of mortgage payments to prevent recipients from falling into foreclosure, Furgol said. The prevention fund is a grant, while the county match comes as an interest-free loan with repayment required only if the house is sold.
Many of the clients served through the county housing department’s own homebuyer assistance program, which also offers interest-free deferred loans to middle and low-income residents, lack the savings necessary to ensure they can continue paying a mortgage after an initial purchase, according to Sarah Nelson, the county’s housing and community development program manager.
She highlighted United Way’s foreclosure prevention fund, as well as its services for financial education and budget coaching, as a unique to this program and one crucial to helping new homeowners maintain financial stability.
The Prosperity Savings program also differs from other homeowner assistance services in that there will also be discounts and credits for property appraisals, home inspection and Realtor commissions through Thanks4Giving, a third program partner. The local organization made up of Realtors, lenders, lawyers and home inspection agents was started to offer relief on home purchase costs to veterans, nonprofit employees, teachers, law enforcement officers and firefighters, according to Joe Gatewood, organization founder.
Those same discounts and credits, an estimated $3,000 value in total, will also be extended to homebuyer program clients, under the partnership.
Gatewood emphasized the benefit of the assistance for clients who can’t afford these expenses after putting a down payment on a house.
“Typically people just don’t have the cash,” he said.
Program partners hope to help 20 households by the end of fiscal 2019.