Subject
title
Homeowner Programs - Community Wide and City Employee Work Session
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Department
Housing and Community Development
Recommendation
Staff recommends that the Mayor and Council receive the presentation, discuss, and provide
direction on their priorities related to the city’s first-time homebuyer downpayment assistance and employee homeownership programs, and on the first-generation and opportunity area downpayment bonus programs.
The following feedback is requested from the Mayor and Council to guide next steps:
1. Do you agree that the homeownership assistance program should focus on households earning up to 80% of the area median income?
2. Do you agree that the homeownership assistance program should focus on downpayment and closing cost assistance up to 10% of the household’s maximum purchase capacity?
3. Do you agree with the layering of the employee downpayment assistance program, first-generation buyer, and/or opportunity area bonuses?
Discussion
National Homeownership Trends and Challenges
According to the National Association of Realtors (NAR) Highlights From the Profile of Home Buyers and Sellers <https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers>, first-time buyers made up only 24% of home purchases in the past year, down from 32% a year prior - the lowest share recorded since data collection began in 1981. Additionally, it states that this is a sharp departure from the long-term norm (around 40% prior to 2008) and signals that fewer newcomers are entering homeownership today. At the same time, the median age of first-time homebuyers has climbed to 38, an all-time high (up from age 35 last year). By contrast, repeat buyers now average 61 years old, also a record high. This aging of first-time buyers indicates that many households are delaying homeownership until later in life, likely due to the hurdles of accumulating a down payment and qualifying for a mortgage under current market conditions. Demographically, today’s buyers are more often single and without children than in past generations - e.g. 62% of recent buyers are married couples and 73% have no child under 18 at home, the highest rate recorded - suggesting that younger families are being squeezed out of the market. Furthermore, homeownership remains uneven across racial groups: about 83% of recent buyers were White, while only 7% were Black and 6% Hispanic, mirroring wider racial homeownership gaps that persist nationwide. In short, first-time and especially first-generation buyers face a far more difficult path to homeownership today than prior generations did.
Key factors driving these trends include steep affordability challenges and limited supply:
High Home Prices
Home values surged during the pandemic and remain elevated. Nationally, prices are up ~38% since 2020 (Home Prices and Rents Remain High, as Steep Interest Rates Lock Homeowners in Place and Slow Construction | Joint Center for Housing Studies <https://www.jchs.harvard.edu/press-releases/home-prices-and-rents-remain-high-steep-interest-rates-lock-homeowners-place-and>). This trend is evident in many markets; for example, the median sale price is about $600,000 in Montgomery County, MD significantly higher than just a few years ago (Montgomery County, MD Housing Market - Redfin <https://www.redfin.com/county/1324/MD/Montgomery-County/housing-market>). Such rapid appreciation has far outpaced income growth, making the typical starter home increasingly unaffordable for young families.
Rising Interest Rates
The same Joint Center for Housing Studies report saw that the spike in mortgage rates over the past 18 months has dramatically raised borrowing costs. The average 30-year fixed rate jumped from ~3% in early 2022 to around 6.5-7% in 2023. As a result, the monthly payment on a median-priced home shot up by hundreds of dollars - e.g. a ~$2,500 payment in early 2022 became ~$3,000 by early 2023 for the same priced home. These higher rates can price out first-time buyers who tend to have tighter budgets. Indeed, nationwide the number of mortgages to first-time buyers dropped 22% in 2022, including a nearly 40% plunge in late 2022. The affordability squeeze forced an estimated 2.4 million would-be buyers out of the market in one year.
Limited Housing Supply
The Joint Center report pointed to a severe shortage of homes for sale as a cause of intensifying competition and for sustaining high prices. Many existing homeowners are “locked in” to low-rate mortgages and choosing not to sell, leaving few entry-level listings. Nationally, inventory in early 2023 was 42% below 2019 levels. In March 2023 only about 970,000 homes were on the market across the U.S., an exceptionally low number. This scarcity especially hurts first-time buyers, who can be outbid by repeat buyers or investors. New construction of affordable single-family homes also lags behind demand, so relief is limited. The net effect is that young buyers face intense competition for a small pool of homes, often pushing prices even higher.
Economic and Credit Barriers
Coming out of the pandemic, many households face high rents, student loan repayments, and other debts that make saving for a down payment difficult. Even though 69% of first-time buyers use personal savings for their down payment, about 25% still rely on gifts or loans from relatives to supplement these savings (Highlights From the Profile of Home Buyers and Sellers <https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers>). Those without family assistance - often first-generation buyers whose parents are not homeowners - are at a decided disadvantage. We see the impact of this wealth gap clearly: the median renter household has only about $10,400 in total wealth, versus $396,000 for the median homeowner household (First-Generation Homebuyers Face Significant Obstacles to Homeownership. To Help, Programs Can Define What “First-Generation” Means. | Urban Institute <https://www.urban.org/urban-wire/first-generation-homebuyers-face-significant-obstacles-homeownership-help-programs-can>). Without intergenerational wealth transfers, accumulating the tens of thousands of dollars needed for a down payment and closing costs is a monumental challenge. This contributes to the homeownership gap for people of color, as Black and Latino families are less likely to have homeowning parents and thus less likely to receive family financial help. Correspondingly, Black and Hispanic homeownership rates remain roughly 25-30 percentage points lower than whites (Home Prices and Rents Remain High, as Steep Interest Rates Lock Homeowners in Place and Slow Construction | Joint Center for Housing Studies <https://www.jchs.harvard.edu/press-releases/home-prices-and-rents-remain-high-steep-interest-rates-lock-homeowners-place-and>) - a disparity that current market dynamics threaten to widen further.
Housing Costs and Demographics
Montgomery County has a highly competitive market with a median home price around $600,000 (Montgomery County, MD Housing Market - Redfin <https://www.redfin.com/county/1324/MD/Montgomery-County/housing-market>). In cities like Rockville, home prices have climbed due to proximity to jobs, quality schools, and amenities. In these areas, entry-level homes are in short supply. Realtors note that well-priced townhomes and condos - often the starter-home segment - attract multiple offers. Inventory is especially tight in desirable “opportunity” neighborhoods that offer good public services and schools. Local buyers are thus facing similar issues of high prices and competition, with many younger buyers priced out or only able to afford smaller or more distant homes.
At the same time, local data show that demand for homeownership among first-time buyers remains very strong when assistance is available. Montgomery County’s Department of Housing and Community Affairs reports that through its assistance programs, it has helped hundreds of residents in their 20s and 30s purchase their first home in the county (Attachment 2 - DHCA memo on downpayment assistance programs 12.29.23). Most of these buyers were 1- to 2-person households, often single individuals or young couples just starting out. They predominantly purchased modestly priced townhouses and condominiums, many of which have 2-3 bedrooms. This suggests that when given a foothold (via down payment support), young families in the area are eager to buy homes that provide room to grow and build roots in the community. Indeed, Montgomery County officials see these programs as a way to promote long-term wealth-building: enabling residents to buy a home sooner means they can begin building equity and stability, rather than continuing to pay high rents.
Local demographic patterns also underscore the importance of targeting underserved groups. For instance, Montgomery County’s assistance programs have been successful in reaching a racially diverse group of buyers. A recent program report noted that a plurality of participants (in all three county programs) were Black/African American households, followed by White households as the next largest group (Attachment 2 - DHCA memo on downpayment assistance programs 12.29.23). This indicates the programs are helping to narrow the homeownership gap for minority residents in the county. (Notably, in one of the county’s newer programs for public employees, the majority of borrowers have been white - likely reflecting the workforce demographics - but the overall combined programs still primarily serve buyers of color
Montgomery County (and many jurisdictions in the region) has invested in down payment and closing cost assistance programs as a strategy to keep homeownership attainable. These programs effectively “buy down” the entry costs for eligible buyers, making the difference between renting and owning for many families.
Rockville Homeowners
According to the U.S. Census Bureau’s 2023 American Community Survey, the City of Rockville has 26,838 occupied housing units. Of those 14,239 are owner-occupied. The median home cost was $658,300 and 9,771 housing units have a mortgage. Of the homeowners with a mortgage, nearly 5,000 (4,912) are spending $3,000 or more with 4.2% spending 30-34.9 percent and 21.1% spending 35 percent or more of their monthly income.
The Role and Impact of Down Payment/Closing Cost Assistance
One of the clearest findings in recent research is that down payment and upfront costs remain the biggest barrier for first-time and first-generation homebuyers. With home prices and closing fees as high as they are, the cash needed at settlement can easily exceed tens of thousands of dollars. Most young buyers simply do not have this wealth accumulated. This is where homebuyer assistance programs play a pivotal role. By providing grants or secondary loans for down payment and closing costs, these programs effectively bridge the gap between what a buyer has saved and what they need to close the purchase.
Research by housing scholars underscores the transformative impact of these assistance programs:
Improving Access and Affordability
Even a relatively small amount of aid can make a purchase feasible. For example, a $10,000 down payment loan (common in many programs) might reduce a buyer’s first mortgage by that same amount, lowering the monthly payment and enabling the buyer to qualify under lender debt-ratio guidelines. Assistance also helps cover closing costs like transfer taxes, insurance, and fees that many first-timers underestimate. By removing the upfront cost hurdle, these programs allow buyers to enter homeownership years sooner than they otherwise could, which in turn lets them start building equity and net worth. A recent Harvard analysis pointed out that high prices and rates have forced first-timers to stretch their budgets severely (Rising Costs of Homeownership Are a Growing Burden | Joint Center for Housing Studies <https://www.jchs.harvard.edu/research-areas/research-briefs/rising-costs-homeownership-are-growing-burden>), and without support, many would remain renters indefinitely. Down payment assistance is thus a key tool to maintain homeownership opportunity in an era of high housing costs.
Closing the Wealth Gap
Because lack of intergenerational wealth is a core issue, down payment assistance has a profound equity benefit. It directly assists those with limited assets. Urban Institute researchers note that the median wealth of first-generation buyer families is dramatically lower than that of families with homeowner parents (First-Generation Homebuyers Face Significant Obstacles to Homeownership. To Help, Programs Can Define What “First-Generation” Means. | Urban Institute <https://www.urban.org/urban-wire/first-generation-homebuyers-face-significant-obstacles-homeownership-help-programs-can>). By targeting aid to first-time buyers (and in some cases specifically to first-generation buyers), programs help to level the playing field. This can gradually chip away at racial and generational disparities in homeownership. Indeed, the first-generation homebuyer concept has gained traction precisely because it zeroes in on households excluded from the traditional wealth transfer cycle of homeownership (Attachment 3 - First-Generation Homebuyer Fact Sheet). These households are often minorities or from historically underserved communities. Providing them with down payment funds can yield outsized benefits in fostering stable housing and wealth accumulation where it’s most needed.
Wealth-Building and Stability
Local program data from Montgomery County show that recipients of down payment loans are buying homes that are sustainable for them in the long run - typically modest starter homes with room for their families to grow (Attachment 2 - DHCA memo on downpayment assistance programs 12.29.23). Because many programs use deferred payment loans (with no monthly payments), the assistance does not strain the buyer’s finances in the early homeownership years. Buyers can comfortably budget for their first mortgage and other expenses, knowing the second loan only comes due upon resale or after a long period. Over time, the family can build significant equity - an opportunity they would have missed without the initial help. The county explicitly views this as promoting wealth-building through homeownership, with evidence that participants are successfully maintaining homeownership. Few if any loans have had to be repaid early (no defaults reported).
Metropolitan Washington Council of Governments Survey
In early 2025, DHCD conducted a survey of Metropolitan Washington Council of Government housing departments. DHCD received responses from 13 jurisdictions which included 15 different programs. The jurisdictions included Gaithersburg, Prince George's County, City of Fairfax, Loudoun County, and Fairfax County, Montgomery County, Prince William County, DC, Falls Church, Arlington, Hyattsville, and Frederick County. Staff is also aware of programs operating in Tacoma Park and Frederick City.
The survey revealed that most jurisdictions offer one or more first-time homebuyer down payment and/or closing cost assistance programs; three do not offer programs. All of the existing programs have income limits while some programs have homebuyer education requirements, or geographic restrictions.
Few jurisdictions offer separate homebuyer programs specifically for their employees and some jurisdictions collaborate with partner lenders (e.g., Maryland DHCD in Prince George's County), while others do not.
The maximum loan amount varies significantly between jurisdictions and the vast majority carry out the program in-house. And program participants range from a tens to hundreds.
Real Estate Effort for Affordable Community Housing (REACH)
Program Overview
The Real Estate Effort for Affordable Community Housing (REACH) program is designed to assist first-time homebuyers at 100 percent Area Median Income (AMI)1 who live or work in Rockville with down payment and closing cost assistance with a soft loan in the amount of up to $12,000 at zero interest and principal payments due after year seven or upon sale, whichever comes first. Funds are currently distributed on a first-come first-serve basis and individuals apply for funding after finding a home and qualifying for a mortgage.
History
In 1993, the city of Rockville provided seed funding in the amount of $75,000 a year for five years for down payment and settlement cost assistance and $145,000 for infrastructure and related costs to launch and administer a first-time homebuyer assistance program. By 1997, administration of the program was transferred from the Montgomery County Association of Realtors to Housing Charities, Inc. Sometime prior to 2009, Housing Charities, Inc. changed its name to Housing and Community Initiatives, Inc (HCI) and is the current program administrator. Per Ms. Susan Cheney, RHE’s Homeownership Coordinator and a longtime board member and former VP of Education for HCI, the contract between HCI and the city was a handshake with the then Mayor of Rockville, Douglas Duncan.
Current Context
HCI manages all functions of the operation, coordinating, and contributing services for REACH. In 2022, HCI notified the city that it no longer wishes to administer the REACH program. As of March, 2024, the REACH program had a fund balance of $289,480.37. The accounts are held at Sandy Springs and First National banks. There are six outstanding loans ranging from $6,000 to $12,000 for a total of $61,000. The outstanding loan balance as of November 2022 was $42,344.11. Loan repayments are currently made to HCI with the payments deposited into one of the two accounts. The city pays HCI a $750 per month administrative fee, plus a contract employee $25 per hour for 16 to 20 hours per month, for a maximum monthly cost of $1,250 and annual cost of $15,000.
HCI has not been audited and has not submitted an annual report to the city in a long time. (Apparently, there were reports to Mr. Edward J. Duffy, early on, in his role as the city’s Assistant Chief of Economic Development.) Therefore, the city has no data on the vitality of the program, how it has been used and how it could be used. There is no clear understanding of how the program was promoted except on its website and through informal communications.
Best Practices and Innovative Program Designs
Successful programs tend to layer incentives, target assistance to those who need it most, and balance generosity with sustainability (ensuring funds revolve or renew to help many families over time).
Target the Assistance
Define clear eligibility focusing on first-time buyers with income limits (commonly in the 80%-120% AMI range to balance need and likelihood of sustainable homeownership). Consider adopting the “first-generation” criterion to reach those without family homeownership history, which can effectively direct funds to underserved groups (First-Generation Homebuyers Face Significant Obstacles to Homeownership. To Help, Programs Can Define What “First-Generation” Means. | Urban Institute <https://www.urban.org/urban-wire/first-generation-homebuyers-face-significant-obstacles-homeownership-help-programs-can>). Ensure the definition is easy to verify (e.g. no parental ownership in past 3 years, as now used by Fannie Mae (Attachment 3 - First-Generation Homebuyer Fact Sheet)). Targeted criteria will maximize the impact of limited funding by serving those who truly need assistance to buy.
Sufficient Loan/Grant Amounts
Provide enough assistance to meaningfully reduce the upfront cost burden. Many successful programs offer $10K-$25K, and some high-cost areas go up to $40K or more. Data from Montgomery County show that when $25K was available, many buyers used the full amount, prompting a proposal to return to $40K per loan (Attachment 2 - DHCA memo on downpayment assistance programs 12.29.23). The lesson is to calibrate the aid to local housing prices. A good benchmark is to aim to cover at least 5% of the median home price in the area (to handle a typical down payment and a portion of closing costs). Also, if resources allow, scale the assistance - for example, give a larger amount to lower-income buyers or those purchasing in targeted neighborhoods. This ensures deeper subsidy where the need is greatest.
Forgiveness and Repayment Terms
Use deferred payment, 0% interest loans or grants to avoid adding to the buyer’s monthly debt. However, retain recapture provisions if the home is flipped early or the buyer moves out - recycling those funds helps support the revolving nature of the program. Clarity and simplicity are key so that buyers understand their obligations. Many jurisdictions opt for the common 0% deferred, due-on-sale model as it’s straightforward and preserves funding. For added incentive, consider partial forgiveness schedules (e.g. 20% of the loan forgiven each year over 5 years, which is used in some first-gen programs (First-Generation Homebuyers Community Down Payment ... <https://www.firstgendpa.org/>)).
Layering and Partnerships
Design the program to complement other available assistance. Encourage buyers to combine sources: for instance, using a state loan that might come with a small DPA grant, plus the local loan, plus perhaps a specialized program (like a veteran’s assistance or employer benefit if applicable). Layering can significantly increase the total support. It’s important to coordinate with the other programs to avoid conflicts (ensure subordinate loan agreements are in place, etc.). Partnerships with state agencies, local housing nonprofits (for counseling and outreach), and even private employers can expand reach.
Staff Research and Findings
Staff examined income thresholds for household size to determine purchase capacity, and different DPA amounts to design the most effective and efficient program. Staff used HUD published DC metro thresholds at the 80%, 100%, and 120% AMI for households with one to eight members. We used the MD-DHCD Low-Income Housing Tax Credit bedroom-to-household size equivalents and determined a maximum affordability threshold using lender-based debt capacity ratios and household income. We then reviewed 2024 Bright MLS sales data for various bedroom size and purchase capacities and current Zillow data to assess market availability.
Staff found that households with incomes at of greater than 100% AMI have access to the entirety of the market without subsidized DPA assistance while 80% AMI households who lack access to homeownership saw substantial growth in market access when provided with 10% DPA specifically those with larger household sizes.
These findings influenced DHCD’s proposed Community-based Down Payment Assistance Program (see below).
Bonus Programs
State-Level First-Generation Homebuyer Programs
Inspired by federal proposals, a number of states have pioneered first-generation-specific down payment assistance in the past two years. These programs explicitly target buyers who are not only first-time buyers but also whose parents (or legal guardians) have not owned a home. The rationale is to direct resources to those without access to generational wealth. In 2023 alone, at least five states - Colorado, Maine, Minnesota, New Jersey, and Vermont - approved funding for first-generation homebuyer assistance programs, joining early movers like Oregon, Rhode Island, and Massachusetts (First-Generation Homebuyers Face Significant Obstacles to Homeownership. To Help, Programs Can Define What “First-Generation” Means. | Urban Institute <https://www.urban.org/urban-wire/first-generation-homebuyers-face-significant-obstacles-homeownership-help-programs-can>). Typically, these state programs provide around $10,000 to $25,000 per eligible borrower in either grant or forgivable-loan form. For example, Michigan recently launched a pilot First-Generation Down Payment Assistance that offers up to $25,000 as a one-time forgivable loan for qualified buyers (MSHDA First-Generation DPA - State of Michigan <https://www.michigan.gov/mshda/pathway-to-housing/firstgendpa>).
While definitions vary, most require that the buyer’s parents do not own a home (some extend it to parents having no ownership in last 3 years, similar to the new Fannie Mae/Freddie Mac definition. Some also include those who have been in foster care as automatically eligible first-gen buyers (recognizing the lack of parental support). These programs are still nascent, so utilization data is limited, but states are reporting high interest. For instance, Colorado’s pilot fund (approved in 2023) quickly drew thousands of inquiries when announced. The key design insight from these efforts is the importance of a clear definition and certification process for first-generation status. Fannie Mae and Freddie Mac have even introduced a standardized First-Generation Homebuyer Certification form for borrowers to attest their status, to streamline program adoption (Attachment 3 - First-Generation Homebuyer Fact Sheet). Early consensus suggests that using a “first-time + parents haven’t owned recently” definition captures the target group effectively while being simpler to verify than a lifetime ownership history (First-Generation Homebuyers Face Significant Obstacles to Homeownership. To Help, Programs Can Define What “First-Generation” Means. | Urban Institute <https://www.urban.org/urban-wire/first-generation-homebuyers-face-significant-obstacles-homeownership-help-programs-can>). Going forward, these first-gen programs could significantly expand homeownership opportunity for communities historically left behind, and they serve as a model that local jurisdictions might layer onto their own assistance efforts (e.g., offering extra local aid to first-gen buyers on top of the state’s contribution).
Workforce and Service-Based Incentives
Another best practice is tailoring homebuyer programs to critical workforce groups or public service roles, whose incomes may not keep pace with housing costs. A standout example is Florida’s “Hometown Heroes” program, launched statewide in 2022. This program offers down payment and closing cost assistance up to 5% of the loan amount (recently raised to $35,000) for first-time buyers who are full-time employees in over 50 different occupations. Eligible professions range from teachers, nurses, paramedics, and law enforcement officers to childcare workers and active military - essentially the folks who serve the community. The assistance comes as a zero-interest, deferred second mortgage (no payments), and in Florida’s case it is forgiven after a certain period (often 5 years) or when the homeowner remains in the home for a set time ([PDF] HOMETOWN HERO HOUSING PROGRAM <https://www.fha.org/common/Uploaded%20files/FHA/Issue-Brief-on-Hometown-Hero-Housing-Program.pdf>). This approach directly addresses the affordability gap for essential workers. Other states and cities have similar initiatives: e.g., teacher home purchase programs, down payment aid for first responders, or incentives for veterans beyond the VA loan benefits. Gaithersburg’s priority admissions for certain occupations (mentioned above) is a light-touch version of this strategy. The lesson from these programs is that layering eligibility criteria by profession or service can garner political and popular support (taxpayers like to help nurses and teachers become neighbors), and it targets assistance to those who are often middle-income but still priced out. When designing a funding allocation, setting aside a portion for such groups or giving them preferential access can ensure the program meets workforce housing goals. It’s important, however, to still enforce income limits in line with the program’s intent (Florida’s program, for instance, requires participants to be under local income ceilings and first-time buyers).
“Bonus” Incentives by Location
Some programs also consider geographic targeting to advance broader equity and development goals. For example, a jurisdiction might offer a higher amount of assistance if the home being purchased is in a designated “opportunity area” - typically neighborhoods with high-quality schools, low crime, and access to jobs, where homeownership for lower-income families is especially beneficial but often unattainable. By providing an “opportunity area bonus,” a program could encourage first-time buyers to move into or remain in these areas, aiding economic integration. Similarly, extra incentives can be offered for buying in revitalization areas or formerly redlined neighborhoods, to help stabilize those communities. In practice, many state mortgage programs already have “targeted areas” (often defined by Census tracts) where income and purchase price limits are relaxed to spur investment. A local example: Maryland’s state mortgage program waives the first-time buyer requirement if purchasing in certain target tracts, widening access to its loans. While this is an eligibility tweak rather than a cash bonus, it shows how geography can be layered into program design. Best practices recommend that local stakeholders consider blending location-based incentives with their assistance programs - for instance, offering an additional $5,000 in assistance for homes in county-designated priority areas or adding a grant for purchases in high-opportunity neighborhoods (perhaps funded by separate “fair housing” grants). This kind of layering can align homebuyer assistance with regional planning goals (like de-concentrating poverty or supporting reinvestment in urban cores). It does add complexity, so it should be done in tandem with clear mapping tools and outreach to ensure buyers understand the additional benefits if they choose certain areas.
In sum, down payment and closing cost assistance directly addresses the primary barrier to homeownership entry. The consensus in recent studies is that expanding these programs, and layering them with smart incentives, is one of the most effective strategies to boost first-time homebuyer rates and narrow homeownership gaps.
Proposed Employee Homeownership Program (EHP)
The City of Rockville aspires to make Rockville a place to live, work, and play. Yet, buying a home in the City of Rockville can be challenging, particularly for first-time homebuyers. The City recognizes many benefits of assisting City employees to live closer to their place of employment, including improved work-life balance due to shorter commutes. Living near work also reduces traffic congestion, improves air quality, and increases options for using local public transit options.
Program Overview
In 2022, the Rockville Mayor and Council approved $250,000 for an Employee Homeownership Program (EHP) as a pilot program, providing $25,000 in downpayment assistance to City employees. The funds were appropriated in the fiscal year (FY) 2024 budget. Future appropriations are yet to be determined.
The EHP would offer Rockville City government employees a deferred, 0% interest loan for down payment and closing costs to purchase their first single-family home, condominium, or cooperative unit in Rockville.
The down payment assistance would be a loan for the purchase of a principal residence in Rockville. The borrowers sign a promissory note secured with a subordinate deed of trust recorded against the property. The loan has zero interest, and no payments are required until the property is: (1) is sold or transferred; (2) no longer occupied as a principal residence; or (3) refinanced with cash out.
The City of Rockville Employee Homeownership Program is also designed to:
• Provide incentives that will allow the City to recruit and retain employees. Assistance is offered to encourage occupancy near place of work;
• Encourage and sustain homeownership with employee homeownership to improve public safety, neighborhood, and economic vitality.
• Lessen barriers to homeownership by providing downpayment cost
Staff Recommendations
Community-based Down Payment Assistance Program
• Set maximum income threshold at 80% AMI
• Allow up to 10% in DPA
• Allow assistance to be used for both downpayment and closing costs
• Deferred no-interest loans are deferred until the homeowner sells or refinances the home. These loans will be structured as a second mortgage, where repayment happens after the primary mortgage is settled.
• Recycle the repaid loans so that they can be used to help more families, multiplying the impact of limited resources.
Employee Homebuyer Assistance Program
• Provide $25,000 in down payment and closing cost assistance to City of Rockville employees who purchase in the City.
• Provide the assistance as a soft second (zero-percent interest, repayable at sale or transfer).
• Eligible staff must work for the City for at least six months.
• The loans can be combined with the Rockville Down Payment Assistance Program.
First Generation Homebuyer Bonus
• Buyer must meet GSE-defined definition of "First-Generation Homebuyer"
• Provide a $10,000 “First-Generation Homebuyer Bonus” to qualifying homebuyers.
• The bonus can be added to the Down Payment Assistance Program
• Ten-year forgivable loans
• All borrowers on the loan must complete and sign the GSE’s First-Generation Homebuyer Certification (Form 1109) to attest to their status.
Opportunity Area Bonus
• Provide $15,000 “Opportunity Area Bonus” to qualifying families with children who purchase homes in the city’s highest opportunity areas
• Added on top of the down payment assistance to increase the buyer’s maximum purchase capacity
Program/Bonus Interplay
• DPA and Employee programs can be combined under certain circumstances.
• All bonuses are mutually exclusive; only one additional loan/grant can be added to the DPA or Employee programs.
• Down payment programs can also be layered with the City's Moderately Priced Dwelling Unit (MPDU) and Rockville Housing Enterprise's Housing Choice Voucher Homeownership programs.
Mayor and Council History
In 1993, the Mayor and Council provided a total of $520,000 to establish the Real Estate Effort for Affordable Community Housing (REACH) program.
In 2022, the Mayor and Council approved funds to assist employees with downpayments when buying a home in Rockville.
Housing was selected as one of the Mayor and Council’s three focus areas. In June 2024, a
high-level briefing was presented outlining the city's housing crisis and policy landscape. Later in 2024, there were three work sessions on the city’s housing strategies: supply, subsidy, and stability.
Homeownership assistance was approved by Mayor and Council as one of the strategies to pursue.
Fiscal Impact
Based on FY26 goals for the program, staff estimate up to:
• Ten (10) DPA loans, average of $46,594, total of $465,940
• Two (2) first-generation bonuses, at $10,000 each, total $20,000
• One (1) opportunity bonus, at $15,000, and
• Assist five (5) employees, at $25,000 each, totaling $125,000.
The estimated total program cost in FY26 (Year 1) would be $625,940. Sufficient funds will be available in the Housing Opportunity Fund, and staff anticipates recovering funds from the HCI REACH program to fully operationalize and fund the programs as proposed.
Next Steps
• Staff will use the feedback received tonight to finalize the program design.
• Create and establish processes, procedures, applications, and tracking documents, etc.
• Work with CCE to develop an outreach plan and communicate with lenders.
• Launch the programs - Goal launch date: October 1, 2025.