The Covenant Homeownership Program (CHP) is an exciting new initiative set to kick off in July 2024, aiming to address longstanding housing discrimination and promote homeownership among historically marginalized communities in Washington State. This program provides downpayment and closing cost assistance through a 0% interest loan to first-time homebuyers with deep roots in Washington, especially those connected to individuals who lived in the state before 1968.

“In Washington, only 49% of BIPOC households are homeowners, compared to 68% of non-Hispanic white households.”

This stark contrast highlights the systemic inequalities that have persisted despite the Fair Housing Act of 1968. The Covenant Homeownership Program is a vital step toward addressing these disparities, providing much-needed support to historically excluded communities and helping individuals achieve their dream of homeownership.

The Historical Context

Washington State has a long history of housing discrimination that systematically excluded marginalized communities from homeownership. From the early 1900s through the 1960s, discriminatory practices like redlining and exclusionary zoning laws segregated neighborhoods and limited housing access for Black, Indigenous, Hispanic, Asian, and other people of color. These weren’t just social biases; they were embedded in the laws, creating deep and lasting economic divides.

To address these ongoing impacts, the Washington State Legislature passed the Covenant Homeownership Act in 2023, championed by groups like the Housing Development Consortium and the Black Home Initiative, and leaders such as Rep. Jamila Taylor and Sen. John Lovick. This Act created the Covenant Homeownership Program (CHP), offering financial help to first-time homebuyers who are descendants of those affected by pre-1968 discriminatory housing practices. The goal is to tackle housing inequality and help close the racial homeownership gap in Washington.

Program Details

Explanation of the Covenant Homeownership Program

The Covenant Homeownership Program (CHP) is a groundbreaking initiative starting in July 2024, aimed at addressing historical housing injustices in Washington State. It offers financial assistance in the form of a 0% interest loan for downpayment and closing costs, which is repaid upon the sale or refinancing of the home. The program’s goal is to make homeownership more accessible and equitable for those who have been historically excluded from this wealth-building opportunity.

Program Limits

Income Limits by County

To qualify for the Covenant Downpayment Assistance Loan Program, your household income must not exceed certain limits. These limits vary by county to reflect the differences in cost of living and housing markets across Washington State. As of July 1, 2024, here are the maximum income limits for each county:

• Adams County: $72,700
• Asotin County: $84,300
• Benton County: $99,900
• Chelan County: $100,300
• Clallam County: $93,900
• Clark County: $116,900
• Columbia County: $101,300
• Cowlitz County: $86,400
• Douglas County: $100,300
• Ferry County: $75,500
• Franklin County: $99,900
• Garfield County: $79,500
• Grant County: $81,800
• Grays Harbor County: $80,800
• Island County: $102,000
• Jefferson County: $88,300
• King County: $147,400
• Kitsap County: $119,700
• Kittitas County: $99,800
• Klickitat County: $84,900
• Lewis County: $89,000
• Lincoln County: $83,800
• Mason County: $99,000
• Okanogan County: $72,800
• Pacific County: $82,400
• Pend Oreille County: $80,300
• Pierce County: $112,300
• San Juan County: $104,700
• Skagit County: $102,800
• Skamania County: $116,900
• Snohomish County: $147,400
• Spokane County: $100,100
• Stevens County: $82,800
• Thurston County: $116,700
• Wahkiakum County: $72,600
• Walla Walla County: $90,200
• Whatcom County: $106,300
• Whitman County: $93,400
• Yakima County: $78,600

It’s crucial to check the specific income limit for your county to ensure you meet the requirements.

Maximum Loan Amount

The Covenant Downpayment Assistance Loan Program offers significant help with your downpayment, but there are limits on the amount you can receive.

The maximum loan amount is up to 20% of the purchase price or appraised value of the property, not to exceed $150,000.

Additionally, you can also receive assistance for customary closing costs paid by the homebuyer. Here’s a breakdown of what this means:

If you’re buying a home appraised at $750,000, you could potentially receive up to $150,000 for your downpayment (20% of $750,000).

Eligibility Criteria

To benefit those most in need, the CHP has specific eligibility criteria. Applicants must have a household income at or below 100% of the Area Median Income (AMI) and be first-time homebuyers. This includes those who haven’t owned a home in the past three years, single parents who have only owned a home while married, and displaced homemakers. Additionally, the homebuyer or their ancestors must have lived in Washington State before April 1968, connecting the assistance to those affected by historical housing discrimination.

Focus on Specific Racial Groups and the Rationale Behind It

The CHP specifically targets racial groups that have faced significant historical discrimination and continue to experience lower homeownership rates today. Eligible groups include Black, Hispanic, Native American, Alaska Native, Native Hawaiian, Pacific Islander, Korean, and Asian Indian individuals. This focus ensures that resources are directed towards addressing and remedying the lasting impacts of discriminatory housing policies, helping to create a more equitable future in homeownership.

Applying for the Program

Steps to Apply

Applying for the Covenant Homeownership Program (CHP) is designed to be straightforward and supportive. Instead of a separate application process, homebuyers work directly with Commission-trained lenders to prequalify for a mortgage loan and establish their eligibility for the program. Here’s how it works:

• Initial Contact: Call the Washington State Homeownership Hotline at 1-877-894-4663 to get started. The hotline staff will connect you with a lender based on your unique situation, goals, and preferences.
• Prequalification: The lender will help you go through the prequalification process for a mortgage loan, assessing your financial readiness and eligibility for the CHP.
• Documentation: You’ll need to provide documentation proving your household income, first-time homebuyer status, and historical residency requirements (i.e., proof that you or your ancestors lived in Washington before April 1968).
• Loan Process: Once prequalified, the lender will guide you through the mortgage application process, integrating the CHP’s financial assistance for your downpayment and closing costs into your overall loan package.

Role of the Washington State Homeownership Hotline

The Washington State Homeownership Hotline plays a crucial role in the application process. This free service, provided by the nonprofit Washington Homeownership Resource Center (WHRC), offers professional support to prospective homebuyers. Here’s what the hotline offers:

• Connection to Lenders: The hotline connects you with Commission-trained lenders who can help you prequalify for a mortgage and determine your eligibility for the CHP.
• Guidance and Support: The hotline staff, including housing counselors, provide personalized guidance throughout the homebuying process, helping you understand your options and what’s required.
• Resource Information: Whether you’re ready to apply or need additional resources, the hotline provides information tailored to your location, income, and specific needs.

Support Available for Those Not Mortgage-Ready

Not everyone is immediately ready to take on a mortgage, and that’s okay. The Covenant Homeownership Program recognizes this and offers support to help you get mortgage-ready. If you’re not quite there yet:

• Housing Counselors: The hotline can connect you with housing counselors who provide free, one-on-one guidance to help you improve your financial situation, understand the homebuying process, and prepare for future homeownership.
• Educational Resources: Access free homebuyer education classes, available both virtually and in-person. These classes cover the essentials of homeownership, from budgeting and credit improvement to understanding mortgage options.
• Continuous Support: Whether you need help with budgeting, improving your credit score, or saving for a downpayment, the hotline and its network of counselors offer ongoing support to help you reach your goal of homeownership, no matter where you are starting from.

Frequently Asked Questions

The Covenant Homeownership Program (CHP) and the Covenant Homeownership Act have generated a lot of interest and questions from potential homebuyers. Here are some of the most common questions:

What exactly is the Covenant Homeownership Program? The Covenant Homeownership Program is a new initiative launched in July 2024 to address historical housing discrimination in Washington State. It provides downpayment and closing cost assistance to eligible first-time homebuyers in the form of a 0% interest loan, which is repaid upon the sale or refinancing of the home. The program aims to make homeownership more accessible to those who have been historically marginalized.

Who is eligible for the CHP? Eligibility for the CHP is determined by several criteria:

• Income Limits: Your household income must be at or below 100% of the Area Median Income (AMI).
• First-Time Homebuyer: You must be a first-time homebuyer, defined as someone who hasn’t owned a home in the past three years. This also includes single parents who have only owned a home while married, displaced homemakers, and those who have only owned a residence without a permanent foundation.
• Historical Residency: You or your ancestors (parents, grandparents, or great-grandparents) must have lived in Washington State before April 1968.
• Racial Groups: The program is targeted towards Black, Hispanic, Native American, Alaska Native, Native Hawaiian, Pacific Islander, Korean, and Asian Indian individuals, based on their historical and ongoing housing discrimination.

How do I apply for the program? Applying for the CHP involves a few straightforward steps:

• Contact the Hotline: Start by calling the Washington State Homeownership Hotline at 1-877-894-4663. They will connect you with a Commission-trained lender.
• Prequalification: Work with the lender to prequalify for a mortgage loan and establish your eligibility for the CHP.
• Provide Documentation: Submit required documentation, including proof of income, first-time homebuyer status, and historical residency.
• Complete the Loan Process: Follow through with the mortgage application process, incorporating the CHP’s financial assistance.

What kind of financial assistance does the program provide? The CHP offers a 0% interest loan to cover downpayment and closing costs, making it easier for first-time homebuyers to secure the funds needed to purchase a home. This loan is secondary to the primary mortgage and is repaid upon the sale or refinancing of the home.

Why does the program focus on certain racial groups? The CHP focuses on specific racial groups that have faced significant historical housing discrimination and continue to experience lower homeownership rates today. This focus is based on extensive research and aims to address and remedy the lasting impacts of discriminatory housing policies, helping to create a more equitable future in homeownership.

What if I’m not ready to buy a home yet? If you’re not ready to buy a home, the CHP still offers valuable support:

• Housing Counselors: Get connected with housing counselors who provide free, personalized guidance to help you improve your financial situation and prepare for homeownership.
• Education: Access free homebuyer education classes, available virtually and in-person, covering everything from budgeting to understanding mortgages.
• Ongoing Support: Receive continuous support to help you become mortgage-ready, including assistance with budgeting, credit improvement, and saving for a downpayment.

In Summary

The Covenant Homeownership Program (CHP) is a game-changer, aimed at fixing the historical wrongs that have kept marginalized communities in Washington State from owning homes. By offering a 0% interest loan for downpayment and closing costs, the CHP opens the door for first-time buyers who are descendants of those affected by discriminatory housing practices before 1968. It’s all about giving crucial financial support and helping to close the racial homeownership gap, promoting fairness and stability.

If you meet the eligibility criteria—household income at or below 100% of the Area Median Income, being a first-time homebuyer, and having historical ties to Washington State before 1968—this is your chance to apply for the CHP. This program helps break down the barriers that have historically stood in your way.