BALTIMORE, Md.–Presidential candidate Kamala Harris has proposed a $100 billion federal program that would help black people purchase homes as part of an effort to close the racial wealth gap.
Harris made the announcement during the Essence’s Global Black Economic Forum, Harris said it would benefit four-million homebuyers through down payment and closing-cost assistance by granting up to $25,000 from the Department of Housing and Urban Development. The program would specifically target red-lined communities she said.
According to a posting of the plan on Harris’ website, in order to qualify for her program:
- The grantee must be purchasing a principal residence.
- The grantee must have lived for at least the preceding 10 years in a historically red-lined community that remains low-to-moderate income.
- Grantee families cannot have an annual income of over $100,000 or $125,000 in high-cost areas.
- Grantee individuals cannot make over $50,000 or $75,000 in high-cost areas.
- The max grant is capped at either $25,000 or 20% of the loan value plus closing costs.
- The maximum home price to qualify for the grant is $300,000 for consideration of high-cost areas.
- Any individual or family would need to demonstrate an ability to pay the mortgage with the lender.
What Plan Would Also Do
Harris said her plan would also amend the Fair Credit Reporting Act to require the credit scores reported by credit reporting agencies to include payments of rent, phone bills, and utilities.
“We’ll require lenders to calculate debt to income on a monthly basis and expand the sources of income for purposes of the calculation,” Harris said. “Lenders currently calculate debt to income as total debt against one year of income. The resulting ratio tends to disproportionately negatively impact Black and Latinx We’ll require mortgage underwriters, when using Federal Housing Administration loans, to calculate a borrower’s debt-to-income ratio by using monthly expenses against monthly income. Mortgage underwriters will also be required to include in their income calculations non-W2 income like earnings from non-traditional work, and Black and Latinx workers are more likely to participate in the gig economy. This change to a debt-to-income ratio using monthly expenses against monthly income will impact 7.5 million Black households and nearly five-million Latinx households.
Harris said that under her plan, to ensure these new homebuyers have the necessary financial literacy to stay in their homes, she would also increase funding for the Housing Education and Counseling (HEC) program.