Announcing the Release of the Housing Pathways Proposal - Coming Home: Providing a Pathway to Housing for All

There is a housing affordability crisis in this country. Within the last several decades, the amount of money spent on housing has increased at dramatic rates for renters and homeowners alike. Simultaneously, gains in income over this time have not kept pace with the rise in housing costs. This means that families are spending more and more of their paycheck on keeping a roof over their heads rather than putting money aside for college, saving for an emergency, setting money away for retirement or for saving to purchase a home if a household is renting.

At the same time, tens of billions of taxpayer dollars are spent each year paying for the interest on mortgages and property tax expenses—otherwise known as the mortgage interest and property tax deductions—that only benefit a small number of wealthy homeowners while doing next to nothing for everyone else. If wealthy families did not have access to these tax benefits, odds are that they would still become homeowners while still saving for other necessary expenses and then some. However, for low-income families and households of color who struggle to get by, these supports could mean much more and make a much greater difference if structured in equitable ways.

It’s for these reasons that Prosperity Now is releasing a new federal policy proposal—Coming Home: Providing a Pathway to Housing for All—that outlines a more equitable and inclusive way to provide financial relief to cost-burden homeowners and renters while also providing supports to put more families on a path to homeownership. Specifically, our new report calls for redirecting these upside-down housing tax dollars so that they benefit more working families, increase financial security for those who are financially vulnerable and take a significant step toward reducing the racial wealth divide.

Instead of focusing on one or two solutions like previous proposals, Prosperity Now is presenting a comprehensive approach that addresses the housing affordability crisis in four parts. The proposal provides families help in areas that include saving, budgeting and planning. Taken together, this creates a pathway to housing that lasts a lifetime.

Here is a Closer Look at the Four Policies at the Heart of this Proposal:

 

 

 

 

The First Step on the Housing Pathway: The Low-Income Renters’ Credit

This provides a credit of $1,000 to $3,000 to low-income, rent-burdened families with larger amounts going to those with the most extreme burdens. Eligible households are those who make 80% or less of the area median income (AMI) and those who carry housing cost-burdens that top 30%. This means they are spending more than 30% of their take-home pay on housing.

The Second Step: The Downpayment-Builder Matched Savings Program

This helps low-income households save-up for one of the biggest barriers to homeownership: the downpayment. Under this program, a low-income family (80% AMI) could save up to a maximum of $2,000 for home purchase closing costs. The federal government would then match what is saved dollar for dollar. This means that if a household saves the maximum amount allowed, they would have a total of $4,000 to help cover these upfront costs.

The Third Step on the Pathway: The First-Time Homeowners Credit

This credit helps alleviate the financial strains that are placed on new low-income (80% AMI) homeowners by providing a refundable credit of up to $6,000 during the tax-filing season that immediately follows a home purchase.

The Final Step: The Homeowners Post-Purchase Tax Credit

This credit helps all homeowners deal with the ongoing costs of owning—like home repairs—by providing a flat, refundable credit of $1,200 annually to new homeowners regardless of income level. This is a simple credit that could reduce foreclosure rates and maintain or increase home values by helping with routine upkeep.

The Housing Pathways Proposal creates a pathway to greater financial security for low-income families and households of color by reducing housing costs at points when these families are making critical housing choices. It does this by reforming the tax code to make it work for more working families rather than making the wealthy few even richer. It is a different vision for the future, where those with the least have opportunities to get ahead and build a more secure future.

Click here to access the proposal!

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