Housing MarketReal Estate

The Hispanic homeownership rate is surging. How LOs and agents are helping buyers

Latino borrowers opted for FHA and ITIN loans, rate buydowns and DPA programs in the face of affordability constraints

Despite elevated interest rates and tight inventory, the national Hispanic homeownership rate reached 49.5% in 2023, with a net gain of 377,000 Hispanic owner households from the previous year.

In total, more than 9.5 million Hispanic households own their home, the National Association of Hispanic Real Estate Professionals (NAHREP) said in its 2023 State of Hispanic Homeownership Report released on Tuesday.  

In 2023 alone, Latinos saw a net gain of 450,000 new households and were responsible for 25.5% of overall U.S. household formation growth. And the 49.5% homeownership rate was close to a record high in census data going back to 2000.

Going forward, NAHREP projects the total number of Latino households to increase as young Latinos move out of their parents’ homes and form new households. About 29.5% of Latinos are under the age of 18, with 2.2 million turning 18 within the next two years. 

Interest rates and rising prices were barriers to Hispanic homeownership in 2023.

“While rising interest rates affected all homebuyers, this impact was more pronounced among Hispanic households, many of whom are first-time buyers with lower median incomes and who live in higher priced markets,” according to NAHREP. 

Affordability challenge workarounds

In the face of affordability challenges, Latino migration to lower-cost areas and the use of co-borrowers were more common in 2023.

States that saw the highest Hispanic net migration between 2022 and 2023 were Texas (+79,000), Pennsylvania (+58,400) and Georgia (+37,600), according to data from Freddie Mac

Texas has consistently seen the highest year-over-year net migration of Latinos in recent years, likely due in part to the relative affordability of housing within the state, the report pointed out. 

Co-occupant, co-borrowers were more common in places where homes can be adapted to comprise multiple living spaces. 

In other cases, family members or friends agreed to serve as a co-signer for a buyer with the intention of coming off the loan at some point in the future.

“In the past, we never talked about co-borrowers — obviously, husband and wife, you know, that’s your co-borrower,” said Edgar Garcia, a real estate agent at Revolve Realty in El Paso, Texas. “But last year I had co-borrowers where the dad was jumping in, the mom jumping in. I’ve even seen grandparents jump in. So, I did see that spike this year.”

Financing options

While the proportion of Latino buyers who used Federal Housing Administration (FHA) loans declined between 2018 and 2022, there may have been an uptick in 2023, according to NAHREP. 

Latinos have historically relied on low down payment mortgage options for home purchases. As recently as 2018, about 31% of Hispanic home purchase originations were done through FHA, almost twice the rate of the general population. 

Several top-producing buyer agents interviewed as part of NAHREP’s practitioner study noted an increase in FHA lending in 2023, with several noting that FHA offered better rates in 2023 than many of its conventional counterparts. 

“Even when [buyers] could go conventional, a lot of times we were telling them, ‘This is why it would be worth going FHA,’” said Iris Rivera, a New Jersey-based real estate agent at Better Homes & Gardens Maturo Realty. “In 2022, we were urging them to go conventional to get their offer accepted because you had to stand out in 2022.”

Homeownership opportunities are becoming more accessible for immigrants who use Individual Taxpayer Identification Numbers (ITINs) rather than Social Security numbers to apply for a mortgage, the report noted.

Real estate agents who were interviewed for the NAHREP report highlighted increased accessibility to ITIN loans, noting new loan products with lower down payments and interest rates.

“There’s a program that’s out now and ITIN buyers, all they need is 5% down, which is helping a lot,” said Irma Rodriguez, a Delaware-based agent for Real Broker LLC. “But in the past, it was 20%, 10%. Recently, it came down to 5%. That’s encouraged the ITIN buyers to come down and start buying.”

Hispanic homebuyers have also made use of financial initiatives, including rate buydowns from homebuilders, as well as down payment assistance programs offered by state and local governments and financial institutions. 

“For Hispanic homebuyers, particularly first-time buyers, these programs help make homeownership more affordable, both in the short-term, by reducing the amount of cash buyers need to make a purchase, and in the long-term, by reducing mortgage amounts through increased down payments,” NAHREP said. 

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