This new home buyer assistance program accepts Philadelphians without credit scores and can help pay off student loans

Pay down debt and build up savings. That is sound and seemingly straightforward advice for people who want to become homeowners.

But it’s easier said than done as homeownership becomes less affordable and paychecks stretch thinner as prices everywhere rise.

A new pilot program aims to help Philadelphians become homeowners by removing or reducing common barriers to homeownership. The Revitalizing Neighborhoods and Increasing Homeownership program, which the Pennsylvania Housing Finance Agency announced last week, offers home buyer education, forgivable loans of up to 5% of a home’s sales price, and grants of up to $25,000 for down payments and closing costs.

» READ MORE: Philly nonprofits plan to create 5,000 Black and brown homeowners through a Wells Fargo grant

Other home buyer assistance programs also offer help with up-front purchase costs. But in this program, home buyers can use excess funds from the grant to help pay their student loans, which can be huge barriers to financial stability and keep households from being able to afford to buy a home. And through this program, people who don’t have credit scores can show nontraditional sources of credit, such as a history of rent payments, to get approved for mortgages.

Buyers in the program also don’t have to pay mortgage insurance, which can help them save hundreds of dollars every month.

Abraham Reyes Pardo, vice president of the nonprofit Urban League of Philadelphia’s office of housing and diversion services, said that despite the high costs of homes and elevated mortgage interest rates, he talks to people every day who are trying to become homeowners.

“The No. 1 item that is preventing some of these folks from getting to the finish line is down payment and closing cost assistance,” Reyes Pardo said. Many households don’t even consider the possibility that they could own a home, he said.

The new assistance program is a partnership between the Pennsylvania Housing Finance Agency and a collaboration called Philly5000, which has a goal of helping 5,000 Philadelphia households of color become homeowners. That partnership between funder Wells Fargo and local nonprofits, such as the Urban League, Hispanic Association of Contractors and Enterprises (HACE), and Congreso de Latinos Unidos, was originally called Philly 5 by 25 and had a goal of creating 5,000 homeowners by 2025. That timeline has moved to 2026.

Owning homes is the main way most families in the United States build wealth, but Black and brown families trail white families in homeownership.

» READ MORE: It’s no easier for Black Philadelphians to become homeowners now than it was 30 years ago (From 2021)

The pilot program is first-come, first-served for qualifying applicants and is aiming to help 180 households in this first phase, Reyes Pardo said.

The Philly5000 collaborative and the Pennsylvania Housing Finance Agency hope to use this pilot as an opportunity to learn what works best to help home buyers succeed and how the program can improve, so they can expand the program in the city. PHFA also offers a similar program in Pittsburgh.

PHFA will be the mortgage lender for participants and also will provide the program’s 10-year forgivable loans.

» READ MORE: How to get a first-time home-buyer grant in the Philly region

To qualify, applicants must be first-time home buyers who live in Philadelphia and are buying a home in the city.

“We want Philadelphians to know that they have an option to stay in Philadelphia if they want,” Reyes Pardo said. “What we’re hearing from many of our constituents is that those folks who have resided in Philadelphia for generations, they need to find a way for themselves or for the next generation to afford to stay in Philly.”

Applicants can make up to $196,200 in individual income and can use program funds to purchase a home that costs up to $659,000.

» READ MORE: Philly brings back its popular first-time home buyer grant program

“In this market, it’s not only the families that usually struggle or who have historically struggled to achieve home ownership” who are struggling now, said Reyes Pardo. “We wanted to make sure this was not only about low- and moderate-income families but also middle-income families who are also people of color and now more than ever need assistance to achieve that goal of home ownership.”

Loan borrowers must contribute either $1,000 in their own funds or 1% of the loan amount, whichever is less. And they can’t have more than $50,000 in cash.

For more information, aspiring home buyers can call the Urban League at 215-985-3220, ext. 201, or email housing@urbanleaguephila.org.