Black and Latino residents in the Philly region can get help buying their first home from new mortgage program

Black and Latino households in Philadelphia and the surrounding region who want to buy a home for the first time can get help with their down payment through a new program from Freddie Mac.

The Philadelphia region is one of 10 metropolitan areas that the government-backed mortgage buyer chose for its initiative to try to narrow racial home ownership gaps, Freddie Mac announced Tuesday. The entity chose the Philadelphia market because of its large number and share of Black and Latino residents who can qualify for mortgages and afford to be homeowners.

The program, which lenders can offer, gives eligible home buyers $3,000 toward their down payment that can be used in combination with other closing cost assistance programs. Buyers also will get help navigating the home-buying process.

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In Philadelphia, the difference in home ownership rates for Black and white households was slightly wider in 2019 than it was three decades earlier, according to the Federal Reserve Bank of Philadelphia. Home ownership gaps continue because of wealth and income gaps and decades of systemic discrimination that blocked Black residents from buying homes.

Federal law allows lenders to create special programs to serve traditionally underserved populations. The BorrowSmart Access program is Freddie Mac’s first such program.

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Down payments are one of the largest barriers to home ownership. That’s especially true for people without access to generational wealth because of centuries of policies that discriminated against people based on race.

Nationwide, the average Black or Latino household has roughly 15% to 20% of the wealth of the average white household, according to the Federal Reserve.

As home prices and mortgage interest rates rise, fewer households can afford to purchase a home.

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To be eligible for the BorrowSmart Access program, aspiring home buyers must meet Freddie Mac’s lending guidelines and can make up to 140% of their region’s area median income — $132,860 for a household of three in the Philadelphia metro area. Buyers must complete one-on-one financial counseling.

In a statement announcing the program, Freddie Mac said the initiative is part of its “commitment to work across the industry to create opportunities for Black and Latino families who have historically lacked equitable access to sustainable and affordable housing.”

On Tuesday, Rocket Mortgage announced that it would be the first national lender to offer the program. Buyers should ask whether their lender offers it.

Here are the other nine metro areas where Freddie Mac chose to make its program is available: