New 20-Year LIFT Loan Proposed for LMI First-Time Homebuyers

New 20-Year LIFT Loan Program for Low- and Moderate-Income First-Time Homebuyers Increases Affordability and Ability to Build Equity. 

Senators Mark R. Warner, (D-Va.), Chris Van Hollen, (D-Md)., Rev. Raphael Warnock, (D-Ga.), Jon Ossoff, (D-Ga.), and Sen. Tim Kaine, (D-Va.), introduced the Low-Income First-Time Homebuyers Act (LIFT Loan) that would create a new 20-year loan for first-time homebuyers whose median incomes were 120% or less than their area’s median income to help build equity more quickly.

Homeownership remains at the center of the American Dream and is the primary vehicle for building generational wealth.  However, for too many Americans—particularly people of color—this dream has often been out of reach.  The nation’s long history of redlining and systemic racism has disproportionately affected communities of color in their pursuit of owning a home.  And the current affordable housing crisis has all but eliminated the opportunity to own a home for many BIPOC and LMI communities.

The racial homeownership gap remains damning with the Black homeownership rate having fallen to lows not seen since the civil rights era of the 1960s.  Today, the gap in homeownership between Black and white homeownership rates is a staggering 31%.  And while the gap has narrowed slightly between Hispanic and white homeownership rates, it still remains at a 27% gap (Calderon).

The new Low-Income First Time Homebuyer Act (LIFT Act) will sponsor low fixed-rate 20-year mortgages for first-time, first-generation homebuyers who have incomes equal to or less than 120% of their area median income (AMI).  Working through Ginnie Mae, the Department of the Treasury would subsidize the interest rate and origination fees associated with these 20-year mortgages so the monthly payment would be similar to the new 30-year FHA mortgage program payment. The new loan helps qualified homebuyers build equity at twice the rate of a conventional 30-year mortgage.

When combined with other programs like Maxine Water’s plan for down payment or closing cost assistance, legislators can make a meaningful impact in closing the racial wealth gap for communities that have long been locked out of homeownership.  For the first time in decades we have a real opportunity to right the wrongs of the deeply-rooted exclusionary policies that persist even today .   Now is the time to make affordable homeownership a priority.

Works Cited:

Calderon, Marisa, et al. “Just Economy Conference.” National Community Reinvestment Coalition, NCRC, 25 May 2021, www.ncrc.org/our-homeownership-moonshot-building-20-million-homes-by-2030/.

Volkova, Maria. “Dems Propose 20-YEAR Mortgage for First-Gen Homebuyers.” HousingWire, HousingWire, 24 Sept. 2021, www.housingwire.com/articles/dems-propose-20-year-mortgage-for-first-gen-homebuyers/.