In a continuing effort to address California’s growing housing affordability crisis and racial homeownership divide, the California Association of Realtors has announced that its Housing Affordability Fund program will provide another $500,000 in closing-cost assistance for eligible first-time California homebuyers from underserved communities. The additional funding brings the total amount of grant money for the program to $2 million.
Since 2022, the program has provided closing-cost grants totaling $1.5 million for 156 first-time homebuyer families from underserved communities throughout California. Closing costs, which are about 11% of the total sales price of a home in California, usually include items such as a real estate commission, loan fee, escrow charge, title insurance premium and a pest inspection.
Denise Welsh, Housing Affordability Fund chair and a director of the Silicon Valley Association of Realtors, said the program helps bridge the housing affordability gap by providing up to $10,000 in closing cost assistance to first-time homebuyers earning 120% or less than the Area Median Income (AMI) who use the services of a California Realtor.
In Santa Clara County, the median income is $181,300 based on a household of four, and in San Mateo County it is $175,000, according to data released by the U.S. Department of Housing and Urban Development in June.
The nonprofit housing organization Neighborhood Partnership Housing Services and U.S. Department of Housing and Urban Development are partnering with the Housing Affordability Fund to administer grants throughout all 58 California counties.
The Closing Cost Assistance Grant is pivotal in aiding historically underserved families to secure affordable and sustainable homeownership, according to the association. These homeownership gaps aren’t new and, for many groups, they’re getting wider. Experts suggest that lack of generational wealth can be to blame, often leaving members of underserved communities with less funds to cover the closing costs and down payment for a home.
“These grants will greatly benefit people of color, women, people with disabilities, Indigenous people and members of the LGBTQ+ community, who aspire for homeownership,” Welsh said.
A 2022 housing affordability study by the California Association of Realtors found that only 12% of Black and Hispanic/Latino households earned the minimum income needed to purchase a home in California. In comparison, 26% of white/non-Hispanic households could afford the same median-priced home, illustrating the homeownership gap and wealth disparity for communities of color, according to the study.
According to the latest U.S. Census Bureau’s residential vacancies and homeownership statistics, the second quarter 2023 overall national homeownership rate was 66%: 75% for whites, 62% for Asians, 49% for Hispanics/Latinos and 46% for Blacks.
“Countless studies have found that homeownership is critical to building generational wealth and economic security for working families,” Jennifer Branchini, president of the California Association of Realtors, said. “California Realtors are pleased to expand ownership housing opportunities for more Californians so they have an opportunity to attain the economic and societal benefits that homeownership provides.”
Those interested in applying for a grant to assist with closing costs associated with buying a home can find detailed information on the California Association of Realtors' Housing Affordability Fund website.
Program criteria:
• Recipients must be a first-time homebuyer who has had no ownership interest in any real property in any location during the last three years.
• Recipients must be a member of an underserved community, which includes people of color; persons with physical, cognitive or mental disabilities; or lesbian, gay, bisexual, transgender, and queer (LGBTQ+) persons.
• The property being purchased must be a single-family residence within California.
• The purchased property must not have an affordable housing deed restriction that limits ownership rights in the property’s equity or creates shared equity homeownership that prevents the resale of the property by the homebuyer.
• Recipient’s income must be no more than 120% of the Area Median Income (AMI) as set forth by the California Department of Housing Community Development.
• Recipients must be represented by a member of the California Association of Realtors in the transaction.
• Recipients must certify they intend to move into the property within 60 days of close of escrow and occupy the property as their principal residence for at least three years.
• To purchase the property, recipients must have used financing consistent with the National Association of Realtors Responsible Lending Criteria, which prevents abusive lending and supports responsible lending principles.
• Recipients must be left with no more than $20,000 in savings after the purchase.
The term Realtor is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.
Looking to take advantage of the closing-cost assistance program and secure your dream home in California? Book an appointment with Key Connections Real Estate today, and let us guide you through the process with our expert knowledge and personalized assistance. Your path to homeownership starts here!
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