Subject
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Rockville Homeownership Assistance Program - Special Presentation
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Department
Housing and Community Development
Recommendation
Staff recommends that the Mayor and Council receive the presentation on the Rockville Homeownership Assistance Program, the city’s down payment assistance program.
Discussion
Background
As costs rise, down payment and closing cost assistance programs can make a significant difference for homebuyers. The median sales price for a home sold in the City of Rockville between January and June of 2026 was $774,258, which would be expected to have a mortgage of $5,572, requiring a borrower to have an annual household income of at least $222,880. This is $80,344 above the city’s median income of $142,536.
Homeownership is a challenge nationally due to low housing supply and high interest rates. These factors have caused first-time homebuyers to make 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, the median age of first-time homebuyers has climbed to 38, an all-time high. Today’s buyers are more often single and without children than past generations, 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.
With high home prices and closing fees, the cash needed at settlement can easily exceed tens of thousands of dollars. Many prospective buyers simply do not have this amount of savings 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.
Program Inception and Design
In April 2025, the Mayor and Council approved a plan to provide down payment and closing cost assistance to first-time homebuyers, first-generation homebuyers, and employees of the City of Rockville. To be eligible for the Rockville Homeownership Assistance Program (RHAP), applicants must:
• Meet household income requirements (unless the applicant is a city employee).
• Purchase a home within Rockville city limits that will be their primary residence. Applicants do not need to currently live in Rockville.
• Meet the lender’s minimum credit score and debt-to-income requirements.
• Complete a HUD-certified first-time homebuyer course.
City employees can receive $25,000. Eligible first-time and first-generation borrowers earning between 80% and 120% of the Area Media Income (AMI) may receive up to 3%, 5%, or 10% of the purchase price (depending on income), or the affordability capacity amount, whichever is less. Affordability capacity is calculated by city staff using a formula that considers factors such as household income, mortgage interest rates, and other program requirements. Qualified first-generation homebuyers with household income at or below 120% AMI are eligible to receive an additional $10,000 forgivable lien. RHAP funds can be combined with state- and county-sponsored down payment assistance programs, such as the Maryland Mortgage Program.
RHAP loans are structured as a “silent” or “soft” second trust, meaning there are no monthly payments and no interest is charged. In addition to these benefits, this also means that the loan does not count in the borrowers “debt-to-income” ratio that is calculated by mortgage lenders while determining eligibility for a first-trust mortgage. RHAP is considered a “second” trust because it is in second position behind the first-trust mortgage. In the unlikely event that someone forecloses, any available payment will be made first to the primary mortgage and then to the City of Rockville next. RHAP loans have a “balloon” payment, in that full repayment is triggered if the borrower sells, rents out the whole property, or refinances with cash out. Certain conditions, such as a health or financial crisis, may warrant an exception.
Program Implementation
Fiscal Year 2026
RHAP launched on October 1, 2025. In January of 2026, the first two RHAP loans were distributed. By early May, all fiscal year 2026 funds were expended, totaling $437,252.
Figure 1. RHAP Actuals vs. Goals (FY26)
Fourteen loans were issued by the end of FY26, exceeding staff’s goal of issuing ten loans in the first year. These loans averaged $31,711 each. Two of the borrowers were first-generation homebuyers, meaning that they received the $10,000 bonus, and five borrowers were employees. The average monthly mortgage payment (including principle, interest, taxes and PMI) was $1,744. The amount of the RHAP loan was roughly 11% of the sales price, averaged among all participants. Ten of fourteen were not required to obtain mortgage insurance.
Figure 2. RHAP Data for FY26
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Average RHAP loan amount |
$31,711 |
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Average percentage of sales price |
11% |
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Average amount toward closing costs |
$12,173 |
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Average monthly mortgage |
$1,744 |
Fiscal Year 2027
At the time of this report, all FY27 funds ($250,000) are expended or reserved. Seven loans will be issued at an average of $35,714. Consistent with FY26, most borrowers will purchase MPDUs. The number of first-generation bonuses doubled to four. The program continues to accept applications, who are placed on a waiting list.
Program Outreach
Outreach for the program included:
• Presentations to city employees at various departmental meetings.
• Feature on televised “Conversations with the Mayor and Council” segment.
• Virtual and in-person presentations for community partners, including Latino Economic Development Corporation, Korean Community Service Center, Housing Initiative Partnership, and the Montgomery County Education Association.
• Presentations to industry professionals, including real estate agents and mortgage lenders.
• Presentation to prospective homebuyers at first-time homebuyer courses hosted by Housing Initiative Partnership and Rockville Housing Enterprises (RHE). This was the first in a series of events co-designed around the goal of homeownership for RHE residents participating in the Family Self Sufficiency Program.
Additionally, there has been a strong synergy between RHAP and the MPDU Homeownership Program. Targeted outreach to first-time homebuyers interested in down payment assistance resulted in an overall increase in MPDU Homeownership applications submitted. Thirteen of fourteen total RHAP borrowers purchased MPDUs. While most City of Rockville MPDUs are priced under $350,000, a handful exceeded $400,000 in FY26. Most applicants who meet the income eligibility requirements for RHAP are unable to afford market-rate units in the City of Rockville.
Mayor and Council History
In 1993, the City of Rockville provided seed funding to launch and administer a first-time homebuyer assistance program called the Real Estate Effort for Affordable Community Housing (REACH) program. REACH was first administered by the Montgomery County Association of Realtors and then moved to Housing and Community Initiatives, Inc., until the program ceased operations, was moved in-house to the City of Rockville Department of Housing and Community Development, and re-launched as the Rockville Homeownership Assistance Program (RHAP) in 2025.
In 2022, the Rockville Mayor and Council approved $250,000 for an Employee Homeownership Program as a pilot program, providing $25,000 in downpayment assistance to city employees. The funds were appropriated in the fiscal year (FY) 2024 budget. Due to staffing challenges, this program was unable to launch until it was incorporated into RHAP in 2025.
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 and homeownership assistance was approved by Mayor and Council as one of the strategies to pursue.
Finally, in April 2025, the Mayor and Council approved the staff recommendation to launch the city-administered Rockville Homeownership Assistance Program.
Next Steps
Staff will continue administering the Rockville Homeownership Assistance Program and increase community education about programs that promote homeownership.