While first-time homebuyers welcomed news of a down payment assistance grant or tax credit, the mortgage industry and housing experts expressed deep skepticism.
Two proposals under consideration in Congress aim to give first-time homebuyers a leg up by offering a grant at closing time, or a tax credit after the fact. Loan officers — who are monitoring the progress of both legislative efforts closely — aren’t in love with either of those options.
One bill, which U.S. Rep. Maxine Waters, D–Calif., unveiled earlier this month, would give first-time, first-generation homebuyers an upfront grant of up to $25,000. Experts have said that determining who would qualify for the benefit could be a significant obstacle.
It’s not wise to bet against legislation backed by Waters, who chairs the House Financial Services Committee. Still, the White House indicated her bill is not a part of President Joe Biden’s infrastructure package — and any standalone bill would be on a difficult road to passage.
The second first-time homebuyer tax credit bill, introduced by U.S. Rep. Earl Blumenauer, D-Ore., aligns more closely with Biden’s campaign promise, as the bill’s author highlighted when he introduced it. But that piece of legislation hasn’t made the cut for the infrastructure package, either.
More bills could certainly be brewing. In the meantime, however, loan officers, industry experts and economists have some thoughts on the two current proposals. Ultimately, lenders, appraisers, loan officers and real estate agents will have to grapple with whatever bill becomes law.
“It’s exciting that so many lawmakers are taking up this issue of increasing minority homeownership seriously — it’s a big win,” said Tai Christensen, director of government affairs at CBC Mortgage Agency. “I say, bring on the bills, and may the best bill win.”
Help not wanted
Given that demand and prices are at their highest levels in modern American history and supply is at its lowest, many industry pros who spoke to HousingWire questioned the wisdom of creating a new federal down payment assistance program for first-time homebuyers.