Owning a home is a proven strategy to building wealth and financial security, but for many people purchasing a home may be too far out of reach. In many cases, buyers have the income to afford monthly payments but lack the initial savings to cover the down payment. Down payments for homes largely depend on the loan program you decide to finance the home on, but they can range anywhere from 3% to 20%. Let’s say a home is $370,000 and you have to put 10% down. That means you would have to put $34,000 down! If you don’t have generational wealth to tap into, does that mean your dream of buying a home is over?
Luckily, New Jersey has programs designed to alleviate the financial barriers that often come with purchasing a home.
New Jersey Housing and Mortgage Finance Agency’s Down Payment Assistance and First-Generation Homebuyers programs help make home ownership a reality for those who are struggling to save enough for a down payment. The Down Payment Assistance (DPA) program provides qualified homebuyers with up to $15,000 towards down payment and/or closing costs (based upon the county of the property being purchased). The FirstGen Program offers lower mortgage rates, reasonable credit requirements, and reduced fees making homeownership more affordable for first-time buyers.
New Jersey is one of the most racially and ethnically diverse states in the country. But for many people of color, systemic barriers such as lower levels of inherited wealth, discrimination in lending, and historical redlining have contributed to a significant racial wealth gap. Programs like DPA and FirstGen Homebuyers are crucial in closing that gap.
According to a report by New Jersey Institute for Social Justice, as of 2022 the homeownership rate for Black people in New Jersey was 40%. Yet the homeownership rate for white people was about 76%.The wealth gap is even more stark: in 2021, the median wealth for white families in NJ was $352,000 — but for Latino families it was $7,300, and for Black families it was just $6,100.
Recent data show that 20% of buyers in the DPA program were also FirstGen homeowners — and that both programs are leading to an increase in homeownership for Black and Brown New Jerseyans. In the FirstGen program, 34.4% of homebuyers are Black and 31.2% are Latino, which shows much greater progress in shrinking the racial wealth gap than traditional first-time homeownership programs. The FirstGen program also serves significant numbers of white homebuyers whose families do not have the resources to help them with a down payment.
As New Jersey’s budget session approaches, it’s crucial that lawmakers prioritize funding these programs at a minimum of $40 million. It’s also important that this funding does not come at the expense of other critical housing initiatives, such as the Affordable Housing Trust Fund, which provides support for affordable housing development and preservation. Cutting funding from the Housing Trust Fund or other vital programs would undermine the broader effort to address the state’s housing challenges. Ensuring stable funding for both homebuyer assistance and affordable housing programs is essential to building a future where all New Jersey residents have access to safe, affordable homes.
