Washington's homeownership gap addressed by new law, but concerns over costs remain

House Bill 1696, recently signed by Governor Bob Ferguson, modifies the Covenant Homeownership Program (CHP) in Washington State, increasing the income threshold for zero-interest loans from 100% to 120% of the Area Median Income (AMI). This law, effective from July 1, 2024, aims to assist first-time homebuyers, especially among marginalized populations, in covering down payments and closing costs. Supporters, including Rep. Jamila Taylor, stress the need to close the homeownership gap, with 69% of white households owning homes compared to just 34% of Black households. Critics, however, argue that it may lead to reverse discrimination and higher home prices due to increased demand.

The program also includes provisions for loan forgiveness after five years for households earning 80% or less of AMI. Loretta Cael, director of Homeownership Parkview Services, emphasizes that the initiative offers "hand ups" rather than "hand outs. " Funding for the CHP comes from a document recording fee, alleviating concerns about taxpayer burdens. The program has already helped over 200 families access homeownership across more than 20 counties in Washington.