“Home, Sweet Home”
How Fahe’s Down Payment Assistance Program is Putting the American Dream within Reach for our Neighbors
As the fallout from the pandemic continues to reverberate throughout many sectors of the American economy, housing markets have experienced significant price spikes and unpredictable market turbulence that have turned homebuying into a fraught endeavor. With the costs of building materials, labor, and real estate soaring, many low-to-moderate-income families have suddenly found themselves confronted by unexpected financial barriers impeding their access to homeownership. Perhaps chief among them are the large, lump-sum down payments required at the front-end of the mortgage process. Although down payment requirements have frequently been obstacles to home-seekers even before the pandemic, the rising financial burdens of entering the housing market have exacerbated the problem and blocked more families from their pathway to the American Dream.
In response to this growing affordability crisis, Fahe recently created a $500,000 down payment assistance (DPA) program to help financially struggling households overcome cost barriers in the mortgage process. Truist bank invested in this project, believing in Fahe’s mission to help families achieve their American Dream by providing the means to fund closing costs and bridge financial gaps needed to secure a home loan. Called “Home Sweet Home,” the DPA program utilizes various financial instruments to reduce up-front cost barriers. For example, Fahe makes use of forgivable grants, low-interest loans, and other borrower-friendly debt arrangements to make the mortgage process more accessible.
Home Sweet Home provides qualifying individuals with $9,000 in up-front financial assistance to help offset down payment and closing costs. It is a 35-year interest-free deferred loan that comes due at the sale of the property or the first refinance of the first mortgage. Access to DPA through Home Sweet Home not only helps families become homeowners but also saves them money over the lifespan of the loan. By making closing costs affordable upon purchase, families avoid having these debt obligations folded into the overall price of the home to cover seller-related closing costs. In turn, this also reduces the property tax liability and lowers the homeowner’s monthly payments.
The Home Sweet Home program allows Fahe to close many of the pervasive accessibility gaps in Appalachia for people who would otherwise qualify for conventional mortgages, yet are unable to amass the liquidity to satisfy down payment and closing cost requirements. While subsidized mortgage products like the USDA 502 Direct program also serve rural low-income families and typically require zero down payment, people who fall outside of the narrow eligibility parameters of such programs frequently have very few accessible mortgage alternatives—especially in underbanked Appalachian communities. These individuals and families may be able to afford the monthly payments of a mortgage, but due, in part, to the economic conditions of the area, they lack the substantial savings needed to cover the up-front costs of becoming a homeowner. Without a program like Home Sweet Home, these families may abandon their American Dream altogether or find themselves excluded from the wealth-building potential of homeownership as they wait and squirrel-away small, incremental savings in order to pay for closing costs.
Recently, Fahe served the some of the first recipients of the Home Sweet Home program through our Member Kentucky Highlands Investment Corporation, located in London, KY. Highlands Housing Corporation President and CEO Gordon Kidd observes that the program has already started to yield transformative outcomes in the lives of home-seekers. “The Home Sweet Home loan program has helped several of our clients to achieve homeownership,” Kidd notes. “These were folks who had good credit and good-paying jobs, but not enough income to accumulate savings to pay a down payment or closing costs for a home purchase. For those clients who received the loans, the Home Sweet Home loans have made the difference between being able to buy a new home for their families and continuing to rent.”
Fahe’s 40+ years of serving the region and our deep connections to Appalachian communities through our Network allow us to represent the financial needs and concerns of traditionally underserved areas. Truist has also recognized the importance of reimagining conventional commercial mortgage instruments and the need to develop innovative, flexible financial tools to help open credit opportunities for our traditionally overlooked communities and bridge homeownership gaps for all of our neighbors. Reflecting on this partnership, Fahe President and CEO Jim King notes, “With Truist, we were able to develop a down payment product that is meeting the needs of families who would otherwise be shut out of homeownership. This example underscores for us the authenticity of the Truist commitment to meet the needs of people and communities.”
In addition to providing direct down payment assistance to families, Fahe can utilize Truist’s grant to add another $2.5 million in assets that can be applied towards furthering our goal of building prosperity and opportunity across Appalachia. By investing in Fahe, Truist contributes to the important goal of making the American Dream a reality for all of our neighbors, no matter where they live.