What first-time buyers need to know

When Will Hunnicutt was searching for an apartment in Atlanta earlier this year, pricey leases and application rejections left him feeling defeated.

“The three-and-a-half times income-to-rent ratio is kind of hard to fulfill when they’re wanting $3,000 in a lot of places,” the 30-year-old social worker said.

Then Hunnicutt found a $1,050-per-month two-bedroom apartment tied to Roots, a real estate investment trust based in the Atlanta area that works to help renters of the properties in its portfolio build wealth toward homeownership. His $1,000 security deposit is invested in the REIT, and he has earned another $200 in quarterly rebates so far for taking care of his unit and paying rent on time.

“The end goal is to buy a house, so having investment funds, that passive income, would be very helpful,” Hunnicutt said.

Roots is currently only available in Atlanta, but has plans to expand this fall. It’s just one approach to a broader aim: helping consumers get financially ready to buy a home.

As buyers continue to struggle with home affordability, experts say programs that help with down payments may be worth another look.

The dream of owning a home is moving further out of reach for many as homes get more expensive. Aspiring homebuyers need to make $113,520 a year to buy a typical U.S. home, according to national brokerage site Redfin — 35% more than what a typical household earns annually.

One barrier toward homeownership is having enough savings for a down payment. Nearly 40% of Americans who don’t own a home point to a lack of savings for a down payment, according to a 2023 CNBC Your Money Survey conducted by SurveyMonkey. More than 4,300 adults in the U.S. were surveyed in late August for the report.

Down payment-assistance programs come in different forms, and from different sources — including state agencies, cities, nonprofits, financial institutions and mortgage lenders. So you’ll have to hunt around to see what’s available in your area.

Usually, assistance programs focus on first-time homebuyers and buyers who meet certain income qualifications. There are also programs focused on “first-generation homebuyers.”

In many down payment-assistance programs, participants have to take a homebuyer education course. Depending on the program, they may also have to meet other conditions, like getting their mortgage through a specific lender or saving a set amount to contribute toward their home purchase.

The aid can be significant. For example, Alternatives Federal Credit Union in Ithaca, New York, has programs offering $9,000 up to $20,000. The Chicago Housing Authority can assist…