In Case You Missed It - Latinos Are Growing Number of First-Time Homebuyers

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ICYMI: Growing Number of First-Time Homebuyers Are Latino

In case you missed it, a growing number of first-time homebuyers are Latino, according to new reports. Latinos are set to comprise roughly 70% of first-time buyers over the next 20 years, an analysis from the Urban Institute has found. But while the number of Hispanic households is on the rise (and on track to surpass 50% by 2025), the rate is still lower than for their White and Asian counterparts.

What's more, a number of hurdles still remain that are preventing a growing number of Latino buyers from becoming homeowners.

Latino homebuyers can sometimes be left behind in a mortgage system that values traditional employment and credit scores, while citizenship and a lack of Spanish-language resources for homebuyers can also impact homebuying prospects.

And while saving for a downpayment is difficult for many interested homebuyers, the wage gap heightens this for Latinos. The median income of a Hispanic household was $55,321 in 2020 versus $67,521 for all races, according to the 2020 Census. That leaves a typical Hispanic household well short of the $68,000 annual income needed to afford the median-priced U.S. home, according to the National Association of Hispanic Real Estate Professionals (NAHREP).

Other barriers to homeownership include rising real estate prices overall and lower credit scores, which are sometimes a result of preferring to use cash for purchases, according to Freddie Mac. Choosing to pay with cash instead of with a credit card can make it harder to build up a credit profile.

But there are resources that can make homeownership a possibility, from federal loan programs that lower the downpayment required to purchase a home, to nonprofits that provide resources to cover some of the costs associated with buying a home. NAHREP also recommends contacting the organization to help find an agent that can guide Latino homebuyers through the process.

- Kristin

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Term of the Day

First-Time Homebuyer Grant

Homebuyer grants are designed to offset some of the purchasing costs for first-time buyers. They typically cover part of a down payment, closing costs, or sometimes, even the total purchase price of the home. They don't require repayment, as long as you live in your home for a required period of time.

Many first-time homebuyer grants are the result of federal funding, although the U.S. government doesn't offer them directly. Instead, these funds are passed on to individual states, counties, and municipalities, which then create grant programs for residents within their jurisdictions.

On average, homebuyers who use these assistance programs save more than $17,000 over the life of their loan.

Off the Charts

Hispanic buyers are more likely than any other group to use riskier, non-mortgage forms of financing for home purchases because of obstacles to getting a mortgage, according to research by the Pew Charitable Trusts. Those include lease-purchase agreements, seller-financed mortgages, and other types of loans that don't come with all the protections of a mortgage.

On Tuesday, Oct. 11 at 1 p.m. EDT, join us on Instagram Live for a discussion with The Balance Editor-in-Chief Kristin Myers and Mabel A. Nuñez, founder and CEO of Girl$ on The Money, on investing and managing your money. Follow us on Instagram to get updates on The Balance's live events this month!