The President’s Budget: Bad News for Low-Income Homebuyers
By now, you’re well aware that the President’s budget, released on May 23, slashes programs that benefit low- and moderate-income Americans, showers the wealthiest families with tax cuts, and boosts the budgets of U.S. defense and security agencies by billions. If implemented, this budget would take away many of the resources that families of limited means currently have to build wealth and strengthen their financial security. Since June is National Homeownership Month, let’s take a look at how the budget proposal would impact families’ ability to buy and keep their homes, which have long been the leading source of household wealth in the United States.
First, the topline numbers: the President’s budget would cut $6 billion (about 13%) from the U.S. Department of Housing and Urban Development, and $5 billion (about 24%) in discretionary spending from the U.S. Department of Agriculture (USDA), the two agencies that have the greatest and most direct roles in helping people become homeowners. But as part of these deep cuts, the proposal would also entirely eliminate a number of programs that support homeownership. The following are just a few of the programs that would get the ax in the President’s budget:
- Section 502 Direct Loan Program: This popular USDA Rural Development program helps low- and very-low-income rural residents become homeowners with the help of a subsidy to assist with loan repayment.
- Section 504 Home Repair Program: Another USDA Rural Development program, Section 504 helps very-low-income homeowners make home repairs and helps very-low-income elderly homeowners remove health and safety hazards, enabling more of these residents to remain in their homes.
- Community Development Block Grant (CDBG): CDBG is a flexible source of funding used to support affordable housing availability and other community development priorities. Many communities use CDBG funds for first-time homebuyer programs, downpayment assistance or closing cost assistance.
- HOME Investment Partnerships Program (HOME): HOME is another flexible grant program, designed specifically to support affordable housing assistance for low-income households. Communities can use HOME funds for homebuyer assistance or home rehabilitation programs, as well as to develop affordable rental housing or assist low-income renters.
- Neighborhood Stabilization Program (NSP): Started in response to the housing crisis, NSP provides funding to eliminate blight and support neighborhoods impacted by foreclosure.
- Housing Trust Fund: Mostly used for rental housing assistance, up to 10% of Housing Trust Fund dollars can be used to support homeownership initiatives.
- Self-Help Homeownership Opportunity Program: Self-Help assists low-income households by supporting sweat equity programs, in which participants contribute significantly to constructing or rehabilitating their own homes.
- Weatherization Assistance Program: This program, administered through the Department of Energy, funds energy efficiency improvements to save low-income families money on their utility bills.
That’s a lot of cuts. But it’s not all bad news. Fortunately, the budget preserves some funding for the Section 502 Guaranteed Loan Program, which makes it easier for low- and moderate-income rural residents to obtain home financing (but requires lower levels of subsidy than the 502 Direct program). There is also funding for the Family Self-Sufficiency (FSS) program, which incentivizes public housing residents, Housing Choice Vouchers recipients and residents of project-based rental assistance housing to increase their incomes by allowing them to save money as they earn more—savings that the family can use to purchase a home of their own after their participation in the program ends.
Still, it’s clear that the President’s budget would make it a lot harder for some of the most vulnerable families to become homeowners or maintain their homes. With few other opportunities to save and invest, these families would be hard-pressed to build wealth and security for the future. So take action today to prevent these drastic cuts and join us as we work to ensure that homeownership remains affordable for all.