Rocket Mortgage rolled out a special-purpose credit program in half a dozen cities across the nation on Tuesday aimed at attracting first-time home buyers in underserved communities. The company noted this is the first phase of its program.
The program, dubbed Purchase Plus, offers up to $7,500 in credits for first-time buyers to use toward their mortgage costs.
Borrowers in designated neighborhoods of Atlanta, Baltimore, Chicago, Detroit, Memphis and Philadelphia, as well as surrounding metropolitan areas will be able to access the program. The pilot was introduced in specific census tracts because they are areas “where the initiative can make the largest impact.”
The credits can be put specifically towards a down payment, which eliminates a significant hurdle towards homeownership, the company said.
“(We’re) addressing a concern we’ve heard time and again – the difficulty of saving for out-of-pocket expenses when buying a home,” said Bob Walters, CEO of Rocket Mortgage, in a written statement.
Rocket’s special-purpose credit program, which it calls a “catalyst” for helping to narrow the homeownership gap, provides eligible home buyers a base credit of $5,000 and an additional lender credit totaling 1% of the home’s purchase price (up to $2,500).
A similar pilot program was introduced by Legacy Home Loans in September.
Legacy’s SPCP is similarly being tested in Atlanta, Baltimore, Chicago, Detroit, Memphis and Philadelphia. The program features free home appraisals, warranty and counseling. Financial assistance for closing costs is also available.
Special-purpose credit programs are likely to gain momentum in 2023, as the federal government continues to stress the importance of narrowing the homeownership gap.
Although in existence for decades, SPCPs received renewed attention this summer after government-sponsored enterprises featured them prominently as part of their equitable housing finance plans. Fannie Mae and Freddie Mac both indicated their intent to increase acquisitions of loans originated through such programs.
Meanwhile, depository institutions, including JPMorgan Chase, Bank of America and Wells Fargo, have also jumped on board this year, pledging to develop or expand their versions of the program.