S. 967 — Downpayment Toward Equity Act of 2025

This section defines terms used in this division, including (1) affirmatively further fair housing; (2) eligible entity (i.e., minority depository institution, community development financial institution targeting or serving minority and low-income populations, qualified nonprofit or mission-driven entity, or unit of general local government); (3) eligible home; (4) eligible mortgage loan; (5) first-generation homebuyer (i.e., individual whose parents lacked homeownership and whose spouse or partner had no ownership interest in the prior three years, or individual from foster or institutional care); (6) heir property; (7) ownership interest; (8) qualified homebuyer; (9) Secretary (i.e., Secretary of Housing and Urban Development); (10) shared equity homeownership program; (11) socially and economically disadvantaged individual (i.e., socially disadvantaged person with requisite income); and (12) State.

This section establishes a program administered by the Secretary of Housing and Urban Development to provide grants to states and eligible entities for downpayment and related financial assistance to qualified first-generation homebuyers (i.e., individuals acquiring an owner-occupied primary residence as the first in their immediate family to do so) involving an eligible mortgage loan. After required reservations, remaining funds are allocated 75% to states by formula (considering states' shares of potential qualified homebuyers, adjusted for median area home prices) and 25% competitively to eligible entities. Assistance may cover (1) downpayment, closing, and interest rate reduction costs; (2) shared equity subsidies to promote affordability; and (3) pre-occupancy disability modifications, with a per-buyer maximum of the greater of $20,000 or 10% of purchase price (excluding disability costs) that is increasable for socially/economically disadvantaged buyers or high-cost areas. (Thus, assistance may layer with other federal, state, or private sources.) States must administer via a housing finance or other approved agency (optionally contracting nonprofits), comply with affirmatively furthering fair housing, and avoid prioritizing state-assisted mortgages or recouping funds (except as authorized). The Secretary may recapture and reallocate funds for untimely expenditure, racially/ethnically disproportionate distribution, or insufficient demand among grantees and must impose uniform program requirements.

This section establishes eligibility requirements for homebuyers receiving downpayment assistance grants under the Act, which must be met by all recipients: (1) household income not exceeding 120% of area median income (as determined by the Secretary), or 140% if the home is in a high-cost area; (2) first-time homebuyer status, as self-attested and defined in 42 U.S.C. 12704 (with the reference to title II deemed to mean this Act, and ownership of heir property not counting toward prior homeownership); and (3) first-generation homebuyer status, as self-attested. It further prohibits requirements for documentation beyond attestations to verify first-time or first-generation status and shields creditors from liability—including penalties, indemnification, or loan repurchase—for assistance provided in good faith reliance on such attestations.

This section establishes eligibility criteria for homes under the Act, limiting assistance to the acquisition by a qualified homebuyer of a residential property consisting of 1 to 4 dwelling units that the homebuyer occupies as their primary residence, subject to required assurances and commitments. This section requires repayment to the state or eligible entity of a proportional amount of assistance—based on years of occupancy up to five years—if the homebuyer fails or ceases to occupy the property as their primary residence (except under shared equity homeownership programs), with no repayment required after five years of occupancy or in cases of hardship or if the property is sold before 60 months and capital gains are less than the repayment amount.

This section limits assistance from grant amounts under this Act to the acquisition of an eligible home involving a residential mortgage loan that—(1) meets the underwriting requirements and dollar amount limitations for acquisition by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac); (2) is made, insured, or guaranteed under any program administered by the Secretary; (3) is made, insured, or guaranteed by the Department of Agriculture; (4) is a qualified mortgage, as defined in section 129C(b)(2) of the Truth in Lending Act (15 U.S.C. 1639c(b)(2)) (i.e., meets ability-to-repay underwriting standards that provide creditors safe harbor from lawsuits); or (5) is guaranteed for the benefit of a veteran.

This section establishes a housing counseling requirement for qualified homebuyers receiving grant assistance under the Act, except as provided in section 4 of the Act. The requirement mandates completion of an approved counseling program—delivered in-person, virtually, by telephone, or other acceptable method—on homeownership responsibilities, financial management, fair housing rights, post-purchase counseling availability, and fair housing complaint filing prior to a sales purchase agreement or loan application. (1) If completion within 30 days is infeasible due to counseling agency capacity, states or eligible entities may allow alternatives such as online homebuyer education, with notice of post-purchase counseling; (2) homebuyers denied an eligible mortgage after counseling and grant commitment must be referred for denial-related counseling and re-qualification, with at least one additional re-qualification permitted per calendar year (or more as determined by the Secretary); and (3) the Secretary must use not less than 5% of appropriated amounts for these counseling costs.

This section establishes annual reporting requirements for each fiscal year the Secretary of Housing and Urban Development makes grants under the Act, including demographic data on applicants and recipients (race, ethnicity, gender); types and amounts of assistance provided (e.g., downpayment assistance, closing costs, mortgage interest rate reductions); and details on acquired properties (location, value, type, first mortgage type and investor), with all data disaggregated by ZIP code or census tract to affirmatively further fair housing. It directs the Secretary to use up to 1% of appropriated funds to build state and grantee capacity for these reports, including by encouraging consultation with fair housing and fair lending organizations. It further requires grantees to protect data privacy, limit use to reporting, and provide confidentiality for survivors of intimate partner violence, sexual assault, or stalking, while authorizing the Secretary to share data for statistical research at the census tract level subject to those protections.

This section directs the Secretary, in consultation with the Attorney General, to survey and compile evidence on whether there is a sufficient history of discrimination in housing and, if so, the appropriate remedy to redress it. The section further requires the Secretary to issue conclusions and recommendations based on that evidence and to provide states and eligible entities awarded assistance under this Act an opportunity to modify their programs accordingly.

This section authorizes the Secretary to establish, by notice or mortgagee letter, any requirements necessary for timely and effective implementation of the grant program under this Act and expenditure of appropriated funds, with such requirements taking effect upon issuance.