The Downpayment Toward Equity Act of 2024, also known as the $25,000 First-Time Buyer Home Grant, was first introduced by the Biden Administration in 2021 to offer $25,000 cash grants to first-time homeowners to offset the cost of a down payment on a home. While the Act has not yet passed, it continues to be put forward as policy to help address the current housing crisis in America.
There are obvious benefits to this policy should it pass—for homebuyers that cannot afford the full cost of a down payment and closing costs, this additional cash could make the difference between purchasing a home or not. The policy is intended to serve the populations of Americans that likely need it the most—first-time, first-generation buyers with incomes below 120% (in some cases, up to 180%) of the area median income.
However, there are potential downsides to this policy. For one, with a current shortfall of over 4 million homes in the U.S., increasing demand for homes may drive prices up further, exacerbating the crisis in housing supply and affordability. There is also concern from some that the Act could encourage more lax mortgage underwriting, ultimately putting homeowners at greater risk down the road.
Is this the right solution to help homebuyers purchase homes? Are there other solutions we should be considering? Should we be focusing instead on supporting the construction of new homes—such as easing zoning restrictions on density and housing size—that encourage greater supply and offer higher quality, more affordable options to buyers and renters?
Housing is at the top of everyone’s mind—we live in it, we build it or fix it, study it, make money from it—and it will become even more important as fewer of us can afford it. It’s time, I believe, to move from policy to action, identify the roots of the problem and take radical steps to change the current system. What do you think?