How charitable capital could help
Capital that helps people become owners
Keeping the American Dream within reach takes real capital. Our program centers on recoverable purchase assistance: a smaller first mortgage for the buyer, with repayments that can help a future household. These examples show the commitments and tradeoffs behind that idea.
Start with the household, and the help already available.
Housing finance agencies, nonprofit lenders, down-payment assistance and shared-equity programs already help buyers. Their eligibility, funding availability and repayment rules vary. A responsible plan checks those options before deciding what additional capital a household needs.
NACA · Habitat for Humanity · Find a state housing finance agency · Find a HUD-approved housing counselor
The need we want to address. Some working households may have enough for a down payment and still face an unaffordable monthly payment. In our example, a buyer with 20% down still faces a $1,158 monthly gap relative to the selected earnings benchmark. That illustrates a financing problem; it does not measure the number of people eligible for our program.
Five approaches. Different commitments.
All figures use the illustrative $500,000 home, 20% down, a 30-year mortgage at 7%, and a $1,158 monthly gap. Cash committed and present value answer different questions. None is a guaranteed program award or a lender quote.
| Approach | Cash committed per home | Present value at 7% | Relief and repayment | Main tradeoff |
|---|---|---|---|---|
| Recoverable purchase assistance Our program approach | $174,052 | $174,052 advanced today | Illustrative 0% deferred second lien. First-mortgage payment falls to $1,503; assistance is repaid at the agreed trigger. | Total debt is still $400,000. Repayment depends on the agreement, home value and household circumstances; recovery is not guaranteed. |
| Upfront principal reduction Grant | $174,052 | $174,052 | $1,503 first-mortgage payment for the 30-year loan. Grant is not repaid. | Capital cannot fund another household unless a separate recapture provision applies. |
| Five-year monthly subsidy | $69,478 total payments | $58,480 | $1,503 for five years, then $2,661. No repayment. | Support ends before the loan does. A household must withstand the payment increase. |
| Declining monthly subsidy | $101,925 total payments | $75,199 | Payment share held near the benchmark for about 13.3 years if earnings grow 4.38% annually. No repayment. | Actual income may grow more slowly. The modeled commitment would then be insufficient. |
| Permanent rate buydown to about 2.12% | Requires a lender quote | $174,052 value of 30-year relief | About $1,503 until sale, refinance or loan payoff. Ten years of relief has a present value of $99,732. | The discounted value of payment savings does not establish the price or availability of a buydown. |
Monthly payments are discounted at 7% ÷ 12 and paid at month-end. For the declining scenario, the first payment uses starting earnings; earnings grow between payments. Cash reserves assume no investment return. The recoverable advance shown is gross capital deployed, before any eventual repayments, losses or expenses. Present value is a comparison tool, not cash available to meet promises. See formulas and assumptions.
The deferred second lien is an illustration. Final program documents and lender approval govern eligibility, repayment, sale and refinancing. Shared-appreciation terms, if used, would also affect the owner's future equity.
What happens when support ends
Principal reduction or deferred second lien
Flat monthly subsidy for 5 years
Declining subsidy until earnings catch up
Principal and interest as a share of median full-time earnings, starting from Q2 2026 earnings and assuming they grow 4.38% a year (the 2020–2026 median pace) with the rate fixed at 7%. Individual earnings, not household income; an actual household's path could be faster or slower.
Relief now versus debt owed
A grant and a deferred second lien give the same monthly relief. They leave the household with very different balance sheets.
Would the subsidy just raise prices?
Assistance can affect both prices and construction, with results that differ by market. Studies of England's Help to Buy disagree about the size of the London price effect. A 2026 government evaluation found broader supply benefits alongside price increases in already expensive areas.
Our program should track prices paid against appraisals and local market conditions. Market choice, purchase-price limits and access to additional homes can help test whether assistance benefits the intended household.
Funding scenarios in both directions
What a pilot should establish
The program should establish what lasting ownership costs, whether households remain secure, and how much capital can return to serve future buyers.
- Fund every household's full commitment before the first closing, including all future monthly support.
- Track the recoverable assistance structure against a clear affordability baseline, with appropriate comparison groups where feasible.
- Choose markets partly on how readily housing supply responds, and track prices paid.
- Work through existing counseling agencies, housing finance agencies and mission lenders rather than rebuilding them.
- Publish aggregate results with independent review. Never publish recipients' personal information.
What counts as success
| Sustained ownership | Still owners at 1, 3 and 5 years; exits by choice versus distress |
|---|---|
| Affordability | Housing cost share of household income at closing and each year after |
| Financial resilience | Emergency savings, 30/60/90-day delinquency, forbearance use |
| Donor impact | Dollars per household-year of affordable ownership; capital recovered |
| Market effects | Price paid versus appraisal; local price trend |
Closings completed is an activity count, not an outcome.