Section 1 Short title
This Act may be cited as the “Downpayment Toward Equity Act of 2025”.
Downpayment Toward Equity Act of 2025
A BILL
To provide downpayment assistance to first-generation homebuyers to address multigenerational inequities in access to homeownership and to narrow and ultimately close the racial homeownership gap in the United States, and for other purposes.
Sec. 2 Definitions
In this section:
Affirmatively further fair housing— The term affirmatively further fair housing has the same meaning as defined by the Secretary to implement section 808(e)(5) of the Fair Housing Act (42 U.S.C. 3608(e)(5)).
Eligible entity— The term eligible entity means—
a minority depository institution, as defined in section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1463 note);
a community development financial institution, as defined in section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4702), that is certified by the Secretary of the Treasury and targets services to minority and low-income populations or provides services in neighborhoods having high concentrations of minority and low-income populations;
any other nonprofit, mission-driven entity that the Secretary finds has a track record of providing assistance to homeowners, targets services to minority and low-income populations, or provides services in neighborhoods having high concentrations of minority and low-income populations; and
a unit of general local government, as defined in section 102 of the Housing and Community Development Act of 1974 (42 U.S.C. 5302).
Eligible home— The term eligible home means a residential dwelling, including a unit in a condominium or cooperative project or a manufactured housing unit, that meets the requirements of section 5.
Eligible mortgage loan— The term eligible mortgage loan means a residential mortgage loan that meets the requirements of section 6.
First-generation homebuyer— The term first-generation homebuyer means a homebuyer that is—
an individual—
whose parents or legal guardians do not, or did not at the time of their death, to the best of the individual’s knowledge, have any present ownership interest in a residence in any State, excluding ownership of heir property or ownership of chattel; and
whose spouse or domestic partner has not, during the 3-year period ending upon acquisition of the eligible home to be acquired using such assistance, had any present ownership interest in a residence in any State, excluding ownership of heir property or ownership of chattel, whether the individual is a co-borrower on the loan or not; or
an individual who has at any time been placed in foster care or institutional care whose spouse or domestic partner has not, during the 3-year period ending upon acquisition of the eligible home to be acquired using such assistance, had any ownership interest in a residence in any State, excluding ownership of heir property or ownership of chattel, whether such individuals are co-borrowers on the loan or not.
Heir property— The term heir property means residential property for which title passed by operation of law through intestacy and is held by 2 or more heirs as tenants in common.
Ownership interest— The term ownership interest means any ownership, excluding any interest in heir property, in—
real estate in fee simple;
a leasehold on real estate under a lease for not less than 99 years which is renewable; or
a fee interest in, or long-term leasehold interest in, real estate consisting of a 1-family unit in a multifamily project, including a project in which the dwelling units are attached, or are manufactured housing units, semi-detached, or detached, and an undivided interest in the common areas and facilities which serve the project.
Qualified homebuyer— The term qualified homebuyer—
means a homebuyer who meets the requirements of section 4; and
includes homebuyers consisting of multiple individuals, co-purchasers, and multi-member households.
Secretary— The term Secretary means the Secretary of Housing and Urban Development.
Shared equity homeownership program— The term shared equity homeownership program means affordable homeownership preservation through a resale restriction program administered by a community land trust, other nonprofit organization, or State or local government or instrumentalities.
Socially and economically disadvantaged individual— The term socially and economically disadvantaged individual means an individual who meets the following requirements:
Social disadvantage—
In general— The individual is a member of a socially disadvantaged group, whose members have historically been subjected to racial or ethnic discrimination within the United States because of their identity as members of such group without regard to their individual qualities.
Presumption; rebuttal— An individual identifying as Black, Hispanic, Native American, or Asian American, or any combination thereof, shall be presumed to be socially disadvantaged for purposes of clause (i). Such presumption may be rebutted with credible evidence to the contrary.
Burden of proof— An individual who does not identify as described in clause (ii) shall be required to establish individual social disadvantage for purposes of clause (i) by a preponderance of the evidence.
Rules— The Secretary may issue regulations as necessary to establish procedures for complying with this subparagraph.
Economic disadvantage— The individual has an income that meets the requirements under section 4(a).
State— The term State means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, and the tribal government of any Indian tribe, as defined in section 4 of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4103).
Sec. 3 First-generation downpayment assistance program
Establishment— The Secretary shall carry out a program under this Act to provide grants to States and eligible entities to provide financial assistance under this section to first-generation homebuyers to assist them with acquiring owner-occupied primary residences.
Allocation— After reserving amounts as required under sections 7(d) and 9(b), any remaining amounts made available to carry out this Act shall be allocated as follows:
States— 75 percent of such amounts shall be allocated among States in accordance with a formula established by the Secretary, which shall—
take into consideration the best available data to provide more funding to States with a higher approximate number of potential qualified homebuyers; and
be adjusted to reflect median area home prices.
Eligible entities— 25 percent of such amounts shall be made available only to eligible entities on a competitive basis.
Assistance— Amounts from a grant under this Act shall be used only to provide assistance—
on behalf of a qualified homebuyer; and
for—
costs in connection with the acquisition, involving an eligible mortgage loan, of an eligible home, including downpayment costs, closing costs, and costs to reduce the rates of interest on eligible mortgage loans;
subsidies to make shared equity homes affordable to homebuyers by discounting the price for which the home will be sold and to preserve the affordability of the home for subsequent homebuyers; and
pre-occupancy home modifications required to accommodate qualified homebuyers or members of their household with disabilities.
Amount— A grant of assistance under this Act—
may be provided on behalf of any qualified homebuyer only once; and
may not exceed the greater of $20,000 or 10 percent of the purchase price in the case of a qualified homebuyer, not to include assistance received under subsection (c)(2)(C) for disability related home modifications, except that the Secretary may increase such maximum limitation amounts—
for qualified homebuyers who are socially and economically disadvantaged; or
in the case of qualified homebuyers acquiring residences located in high-cost areas, as determined based on median home prices or prices of residences under a shared equity homeownership program.
Layering of assistance— Assistance from grant amounts under this Act may be provided on behalf of a qualified homebuyer who is receiving assistance from other sources, including other State, Federal, local, private, public, and nonprofit sources, for acquisition of an eligible home.
State administration—
In General— The Secretary shall require that each State receiving grant amounts under this Act administer the program to provide assistance with such amounts through the State housing finance agency for the State or such other housing agency of the State as the Secretary finds appropriate, except that any such agency may, at the option of the agency, contract with a nonprofit entity, including a housing counseling agency approved by the Secretary, to administer such assistance.
Affirmatively furthering fair housing— For a State to be eligible for a grant under this Act, the State shall be in compliance with the Secretary’s regulations implementing the requirement to affirmatively further fair housing.
Prohibition of priority or recoupment of funds— In selecting qualified homebuyers for assistance with grant amounts under this Act, a State or eligible entity may not—
provide any priority or preference for homebuyers who are acquiring eligible homes with a mortgage loan made, insured, guaranteed, or otherwise assisted by the State housing finance agency for the State, any other housing agency of the State, or an eligible entity when applicable; or
seek to recoup any funds associated with the provision of downpayment assistance to the qualified homebuyer, whether through premium pricing or otherwise, except as provided in subsection (g) or otherwise authorized by the Secretary.
Recapture and reallocation— The Secretary shall require changes in a grantee’s policy or distribution of funds or recapture any amounts remaining available to a grantee, and reallocate such funds among other States and eligible entities, if the Secretary determines in his or her sole discretion that—
a State or eligible entity—
has not demonstrated the capacity to expend grant funds in a timely manner that furthers the purposes under this Act; or
is distributing or plans to distribute grant funds in a manner that results or will predictably result in qualified homebuyers from racial or ethnic groups that have faced historic obstacles to homeownership failing to receive the benefits of such funds in proportion to their population among qualified homebuyers in the relevant area; or
there is insufficient demand among qualified eligible entities to distribute funds.
Uniformity and program standardization— The Secretary shall establish a uniform set of requirements to which each State and eligible entity receiving grant amounts under this Act shall comply.
Sec. 4 Qualified homebuyers
Requirements— Assistance from grant amounts under this Act may be provided only on behalf of a homebuyer who meets all of the following requirements:
Income— The household of the homebuyer has an income that does not exceed—
120 percent of median income for the area (as determined by the Secretary) within which—
the eligible home to be acquired using such assistance is located; or
the place of residence of the homebuyer is located; or
in the case of a homebuyer acquiring an eligible home that is located in a high-cost area, as determined by the Secretary, 140 percent of the median income for the area within which the eligible home to be acquired using such assistance is located.
First-time homebuyer— The homebuyer, as self-attested by the homebuyer, is a first-time homebuyer, as defined in section 104 of the Cranston Gonzalez National Affordable Housing Act (42 U.S.C. 12704), except that—
for the purposes of this Act the reference in such section 104 to title II shall be considered to refer to this Act; and
ownership of heir property shall not be treated as owning a home for purposes of determining whether a borrower qualifies as a first-time homebuyer.
First-generation homebuyer— The homebuyer, as self-attested by the homebuyer, is a first-generation homebuyer.
Reliance on borrower attestations— No additional documentation beyond the borrower’s attestation shall be required to demonstrate eligibility under paragraphs (2) and (3) of subsection (a), and no creditor shall be subject to liability, including monetary penalties or requirements to indemnify a Federal agency or repurchase a loan that has been sold or securitized, for the provision of downpayment assistance under this Act to a borrower who does not meet the eligibility requirements if the creditor does so in good faith reliance on borrower attestations of eligibility required by this Act or regulation.
Sec. 5 Eligible homes
In general— Assistance from grant amounts under this Act may be provided only in connection with the acquisition by a qualified homebuyer of a residential property that—
consists of 1 to 4 dwelling units; and
will be occupied by the qualified homebuyer, in accordance with such assurances and commitments as the Secretary shall require, as the primary residence of the homebuyer, subject to section 4.
Repayment of assistance—
Requirement— The Secretary shall require that, if a homebuyer to or on behalf of whom assistance is provided from grant amounts under this Act fails or ceases to occupy the property acquired using such assistance as the primary residence of the homebuyer, except in the case of assistance provided in connection with the purchase of a principal residence through a shared equity homeownership program, the homebuyer shall repay to the State or eligible entity, as applicable, in a proportional amount of the assistance the homebuyer receives based on the number of years they have occupied the eligible home up to 5 years, except that no assistance shall be repaid if the qualified homebuyer occupies the eligible home as a primary residence for 5 years or more.
Limitation— Notwithstanding subparagraph (A), a homebuyer to or on behalf of whom assistance is provided from grant amounts under this Act shall not be liable to the State or eligible entity for the repayment of the amount of such shortage if the homebuyer fails or ceases to occupy the property acquired using such assistance as the principal residence of the homebuyer at least in part because of a hardship, or sells the property acquired with such assistance before the expiration of the 60-month period beginning on such date of acquisition and the capital gains from such sale to a bona fide purchaser in an arm’s length transaction are less than the amount the homebuyer is required to repay the State or eligible entity under subparagraph (A).
Sec. 6 Eligible mortgage loans
Assistance from grant amounts under this Act may be provided only in connection with the acquisition of an eligible home involving a residential mortgage loan that—
meets the underwriting requirements and dollar amount limitations for acquisition by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation;
is made, insured, or guaranteed under any program administered by the Secretary;
is made, insured, or guaranteed by the Department of Agriculture;
is a qualified mortgage, as defined in section 129C(b)(2) of the Truth in Lending Act (15 U.S.C. 1639c(b)(2)); or
is guaranteed for the benefit of a veteran.
Sec. 7 Housing counseling requirement
In general— Except as provided pursuant to section 4, assistance with grant amounts under this Act may not be provided on behalf of qualified homebuyer unless such homebuyer has completed a program of counseling with respect to the responsibilities and financial management involved in homeownership before entering into a sales purchase agreement or loan application, except as provided under subsection (c), as the Secretary shall require, provided through a counseling agency approved by the Secretary. Such program may be delivered in-person, virtually, by telephone, or any other method the Secretary determines acceptable and shall include providing information on fair housing rights and on the availability of post-purchase housing counseling opportunities and instruction on how to file a fair housing complaint.
Alternative requirement— The Secretary shall provide that if a qualified homebuyer is unable to complete the requirement under subsection (a) within 30 days due to housing counseling agency capacity issues, a State or eligible entity may allow such qualified homebuyer to complete alternative homebuyer education to fulfill the requirement under subsection (a), including homebuyer education that is provided through an online platform, and such qualified homebuyer shall be made aware of the availability of post-purchase housing counseling opportunities.
Referral upon mortgage denial— The Secretary shall require that any qualified homebuyer who has completed a counseling program referred to in subsection (a) or alternative requirement pursuant to subsection (b), who receives a commitment for assistance with grant amounts under this Act and who applies for an eligible mortgage loan for acquisition of an eligible home and is denied such mortgage loan, shall be referred to a counseling agency described in subsection (a) for counseling relating to such denial and for re-qualification. An eligible homebuyer may be re-qualified at least 1 additional time in a calendar year, or more as determined by the Secretary.
Funding— Of any amounts appropriated to carry out this Act, the Secretary shall use not less than 5 percent for costs of providing counseling referred to in subsection (a).
Sec. 8 Administrative costs
States and eligible entities receiving grant amounts under this Act may use a portion of such amounts for administrative costs up to the limit specified by the Secretary.
Sec. 9 Reports
Annual report—
In general— For each fiscal year during which the Secretary makes grants under this Act, the Secretary shall submit to Congress, and make publicly available online in an easily accessible location on the website of the Department of Housing and Urban Development, a report that shall include—
demographic information regarding applicants for and recipients of assistance provided pursuant to this Act, including race, ethnicity, and gender;
information regarding the types and amount of assistance provided, including downpayment assistance, assistance with closing costs, and assistance to reduce mortgage loan interest rates; and
information regarding properties acquired using such assistance, including location, property value, property type, and first mortgage type and investor.
Disaggregation— All data included in an report required under paragraph (1) shall be disaggregated by ZIP Code or census tract level, whichever is most feasible, and demographic information, including race, ethnicity, and gender, and any other data points the Secretary deems appropriate especially to observe equitable outcomes to ensure the grant program is affirmatively furthering fair housing.
Capacity building—
In general— Of any amounts appropriated to carry out this Act, the Secretary shall use not more than 1 percent to assist States and eligible entities to develop capacity to meet the reporting requirements under subsection (a).
Consultation— The Secretary shall encourage States and eligible entities to consult with community-based and nonprofit organizations that have as their mission to advance fair housing and fair lending.
Privacy requirements—
In general— Each State and eligible entity that receives a grant under this Act shall establish data privacy and security requirements for the information described in subsection (a) that—
include appropriate measures to ensure that the privacy of the individuals and households is protected;
provide that the information, including any personally identifiable information, is collected and used only for the purpose of submitting reports under subsection (a); and
provide confidentiality protections for data collected about any individuals who are survivors of intimate partner violence, sexual assault, or stalking.
Statistical research—
In general— The Secretary—
may provide full and unredacted information provided under subsection (a), including personally identifiable information, for statistical research purposes in accordance with existing law; and
may collect and make available for statistical research, at the census tract level, information collected under paragraph (1).
Application of privacy requirements— A recipient of information under subparagraph (A) shall establish for such information the data privacy and security requirements described in paragraph (1).
Sec. 10 Compelling interest study
In general— The Secretary, in consultation with the Attorney General, shall survey and compile evidence to determine whether or not there is a sufficient history of discrimination in housing and, if so, the appropriate remedy to redress such historic discrimination.
Recommendations— The Secretary shall make conclusions and recommendations based on the evidence compiled under subsection (a) and provide States and eligible entities granted awards under this Act an opportunity to modify their programs for assistance under this Act according to such recommendations.
Sec. 11 Implementation
The Secretary shall have the authority to establish by notice or mortgagee letter any requirements that the Secretary determines are necessary for timely and effective implementation of the grant program under this Act and the expenditure of funds appropriated, which requirements shall take effect upon issuance.
Sec. 12 Authorization of appropriations
There is authorized to be appropriated for grants under this Act $100,000,000,000, and any amounts appropriated pursuant to this section shall remain available until expended.