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Down Payment Assistance Could Be Key For First-Time Homebuyers In 2025

By KIMBERLEY HAAS

As home prices and mortgage rates remain stubbornly high, first-time buyers hoping to hit the market in 2025 could benefit from down payment assistance programs.

Reports show that existing and new home sales rose in December, but affordability is expected to remain challenging in the first quarter due to limited inventory. Mortgage rates are up from the 30-year fixed-rate average of 6.69% a year ago and may be volatile in the coming months.

With affordability challenges in mind, attention is being paid to down payment assistance resources available throughout the country. The New York Times published an article by Ann Carrns on Jan. 17 that outlined the struggle buyers are facing and highlighted options that can help buyers come up with additional funds.

“Get all the grants you deserve,” Deatra Kemp, an advocate for first-time home buyers in Milwaukee, said. “Don’t leave any money on the table.”

Down payment assistance provider CBC Mortgage Agency is hoping to expand its offerings in 2025, according to President Miki Adams.

CBC Mortgage Agency uses its for-profit business structure to offer a national down payment assistance program focused on increasing minority homeownership, particularly within the African American, Hispanic, and Native American communities.

Adams recently spoke with The Mortgage Note, saying one of their goals is to try to expand their geographic area into more communities that are underserved.

“We’re a down payment assistance provider. It’s really important that we are penetrating those markets where we can really make a difference and help borrowers,” Adams said.

Adams said their reach goes beyond low and moderate-income borrowers.

“We recognize that it isn’t just low- and moderate-income borrowers who are in need of assistance but also middle- and high-earners who are coming out of college. They’re just starting their careers and haven’t had the opportunity to accumulate sufficient funds for a down payment. We encompass the full range of borrowers,” Adams said.

Adams said that this year they plan to hold more in-person homeowner events with lenders and realtors.

“Down payment assistance is not something that is as widely known as we think it is. We need to educate consumers about the availability of down payment assistance programs, whether it’s ours or a state or local down payment assistance program. I think there’s a general lack of knowledge that these programs are out there,” Adams said.

As a correspondent investor that works hand in hand with lenders, CBC Mortgage Agency holds training webinars for loan officers.

Adams said they hope to educate more realtors about the benefits of down payment assistance.

“It’s just as important for the realtors to be aware of the programs out there as well,” Adams said.

Because over 92% of the people CBC Mortgage Agency serves are first-time homebuyers, they have a heavy focus on borrower education that extends past the purchase of a home.

Following a purchase of a home, buyers are enrolled in a borrower success program, which includes 18 months of post-purchase counseling to guide them as they navigate new challenges such as property tax increases or major home systems failing without warning.

“The goal is to see our homeowners be long-term successful homeowners, so they can have that opportunity to build a legacy for their children, and/or build wealth to take care of themselves in the future,” Adams said.

“The value of that post-purchase counseling is something you just can’t put a price tag on.”

Adams explained that they pay for the counseling, not the buyer. She would like to offer the program to homebuyers for two years.

CBC Mortgage Agency will have served over 50,000 families by the end of Q1 2025.

According to the National Association of Realtors, the percentage of first-time homebuyers shrunk to a historic low between July 2023 and June 2024.

During that time period, first-time homebuyers accounted for just 24% of all buyers.

Prior to 2008, the share of first-time buyers had a historical norm of 40%, according to NAR’s 2024 Profile of Home Buyers and Sellers.

“Underscoring the hurdles to entering the housing market, first-time home buyers’ median age reached an all-time high of 38 years old. In the 1980s, the typical first-time home buyer was in their late 20s,” the report says.

Overall, 83% of buyers were white, up from 81% percent last year. However, among first-time buyers, 36% were non-white homebuyers.