NeighborWorks® America has decades of experience with down payment assistance (DPA): The national organization has studied and facilitated different ways of supporting the network in instituting such assistance, a lifeline for many homeowners.
This week, NeighborWorks is shining the focus on a new, comprehensive Down Payment Assistance Practitioners Toolkit to help the affordable housing and community development industry access resources and knowledge. The toolkit is aimed at helping organizations partner with community leaders to develop DPA programs locally and covers the entire development process, from program design and feasibility studies to implementation, compliance and administration. It also includes practical steps, templates and resources to support organizations in expanding access to homeownership.
“A down payment can be a huge obstacle for families looking to buy a home,” explained Laurie O’Brien, Senior Director of Lending at NeighborWorks. “The assistance can really help, and we wanted to take our expert knowledge in creating these programs and share it.”
NeighborWorks’ expertise led to the nonprofit’s selection as an administrator and architect of LIFT, a 12-year, $400 million down payment assistance program, funded by Wells Fargo, that put 25,000 individuals and families in their own homes. NeighborWorks was instrumental in providing technical support as 64 network organizations across 81 markets helped make the dream of homeownershi
p a reality. And working on the program led to even more expertise in the field of down payment assistance as network organizations used what they learned from LIFT to develop programs in their communities.
“We learned so much from LIFT,” said Alicia McCoy, NeighborWorks’ interim Vice President of National Homeownership Programs and Lending. “We hope the toolkit will give the network and everyone who uses it a leg up.”
McCoy also hopes community development practitioners who use the toolkit will see how down payment assistance can help nonprofits start a new line of business that will generate revenue and help their organizations become more sustainable, following in the footsteps of the Sustainable Business Initiative, with its goal of strengthening organizations by helping them diversify their revenue streams and think outside the box. Sustainability is essential, McCoy said, especially as it becomes harder to tap into outside funding.
O’Brien noted that, even as NeighborWorks improved its expertise during LIFT, network organizations that ran
LIFT programs in their communities also became experts. They stand ready to institute new DPA programs as they identify new funding resources, she said. Some have already started new or adjacent programs, including First Mortgage programs and rehab lending.
Neighborhood Finance Corp, for instance, started the Neighborhood Reinvest Down Payment Assistance Program, where would-be homeowners can apply for a $10,500 30-year deferred loan at 0% interest. Neighborhood Finance Corp. was one of six network organizations that provided input for the toolkit. The others were NeighborWorks Home Partners, GROW SD, NeighborWorks Montana, Neighborhood Housing Services of Greater Berks, and DreamKey Partners.
DPA programs help families that include teachers, fire fighters and health care workers – families who are instrumental in keeping a community going, McCoy said. But those same families may not generate the income that allows them to save all they need for a new home and the stability a new home can provide.
She said that rehab loans can help families stay in their homes in a tight housing market with escalating prices. DPA programs help families shorten the timeline to homeownership – and serve as a solution for families working to get into a home of their own.
“We heard many times with the LIFT program, ‘It would have taken me five years to save for the down payment for our home,’ especially in high-cost markets,” recalled O’Brien, who worked on the LIFT program for seven of its 12 years. “I think it’s true even in non-high-cost markets. Down payment programs are so valuable for the communities they serve.”
Check out the NeighborWorks Down Payment Assistance Practitioner Toolkit.
Tune in to a recent episode of The Community Effect podcast and hear how a NeighborWorks network organization in Memphis, Tennessee, utilizes down payment assistance to help clients actualize the dream of homeownership.
