Debt Barrier Removal Program

Homeownership constitutes the largest component of median household wealth through intergenerational wealth transfer in the US. The wealth gap created by generations of discriminatory housing practices have left families without the benefit of decades of real estate appreciation that can be leveraged to help their children and grandchildren become homeowners, pay for college, or weather financial challenges.

The two main causes for denial of financing for households has been debt-to-income ratios and credit history. This Pilot Program funding of $250,000.00 will support 5-10 households in 2022-2023 fiscal year. The purpose of this fund is to help correct credit challenges now to allow for wealth creation in a way that only Habitat’s homeownership model can address. We sell homes at cost which is historically well below appraised value. This gives Habitat room to absorb homebuyers’ prohibitive debts in the price of the home without affecting mortgage financing.

What type of debts qualify?

Eligible applicants will be mortgage-ready (income, assets, credit) but have excessive debts that are hindering their ability to purchase a home. Maximum repayment amount of $50,000.00 (examples):

• Deferred Student Loans
• Back Child Support (must be current and paying as agreed at time of application)
• Tax Liens or other government judgments
• Other debts on a case-by-case basis (examples: medical debts, debts due to identity theft, etc.)

How will these debts be paid off?

• These debts will be paid by Habitat at least 4 months prior to home completion (50% of minimum required Sweat Equity Hours or more must be completed)
• Total cost of paid debts will be added as part of the cost of the home completion