And at 78 years old, she’s excited to achieve this lifelong goal. Gamez is one of a growing number of Latinos who are accounting for an increasingly larger percentage of first-time homebuyers. While her age may be unusual for a first-time Latino homebuyer, the story of how she got to this point is not. She’s long dreamed of owning her own place, but until recently has struggled to save for a down payment or keep her credit score healthy. She worked with an assistance program to help her afford the upfront costs of home buying, and plans to rent out one of the units. “It makes it all worth it since my tenant will be covering my mortgage,” said Gamez, a retired preschool teacher. “I am able to use my retirement income toward traveling and really enjoying myself.” “To Latinos, a house is much more than a place to live or an investment, it is the essential pillar of our culture where our most important asset, our family, comes together and thrives,” said Mauricio “Mo” Perez, head broker for Keller Williams Realty in Chula Vista, California, and treasurer for the National Association of Hispanic Real Estate Professionals (NAHREP). “So for Latinos, the goal of owning a home (in my opinion) may be a higher priority than for other demographics.” While language, financial, and cultural differences can make it harder for Latinos to qualify for a mortgage, they are still one of the fastest-growing demographics of first-time home buyers, and many organizations are set up to assist Latinos in the process.
‘The Future of Home Ownership is Hispanic’
The number of Hispanic homeowners, especially those under 65, has grown rapidly in recent decades and is expected to continue to soar over the next 20 years, according to a report from the Urban Institute, a think tank focused on upward mobility and social equity. The change, driven partly by population growth, hasn’t been lightning fast, but it’s been profound: In 1990, just 7.3% of households under 65 were Hispanic. By 2040, that number is projected to exceed 20%. Indeed, between 2020 and 2040, 70% of new homeowners will be Hispanic, the researchers predicted. The trend has led mortgage giant Freddie Mac to declare that “the future of home ownership is Hispanic.”The reason for the coming shift: the Hispanic population is younger, and growing faster than other demographic groups.“The majority of them are actually entering their prime homebuying years, so they’re becoming homeowners,” said Jun Zhu, a researcher at the Urban Institute’s housing finance policy center.Not only is the Hispanic population increasing, but Hispanic people are increasingly more likely to become homeowners. The rate of Hispanic home ownership has been steadily rising and is on track to break 50% by 2025 according to an analysis of Census data by NAHREP. However, that rate is still lower than their White and Asian counterparts. “For Latino families, homeownership represents stability and financial security, but it also is representative of improved quality of life. It represents a permanent gathering place, and ultimately a sense of belonging within your community and within your city,” said Erica Mancinas, manager of the financial empowerment program at UnidosUS, a nonprofit organization advocating for civil rights for Latinos.Case in point: Mancinas’s parents immigrated to the U.S. in the 1980s and bought a starter house in the 1990s through assistance programs. They raised their children in that “starter house” and still live there, Mancinas said.“My parents have said many times that the stability that having this home provided them and provided us as a family is what really allowed them to begin saving for our college education,” she said. Hispanic buyers tend to differ from other demographic groups in important ways. For example, they’re more likely to live in multi-generational households, and have larger family sizes on average—the average Hispanic household had 3.19 people living in it according to the 2021 census, versus 2.4 for non-Hispanic ones. They’re also more likely to have income from self-employment sources that are often overlooked by mortgage lenders, Zhu said.
What Stands in the Way
Latino homebuyers can sometimes be left behind in a mortgage system that values traditional employment and credit scores. Citizenship and a lack of Spanish-language resources can also impact their homebuying prospects. They often live in areas where few new homes are being built and may need more space if they’re living in an intergenerational household. For example, at one time, Chicago resident Anakaren Ramirez never thought she’d be able to buy a home. While working as an administrative assistant at Midway Airport, she was living in a basement apartment with her mother, two daughters, and her brother. She needed more space for her family, but home ownership seemed out of reach. Ramirez thought her citizenship status would prevent her from getting a mortgage—she was a participant of the Deferred Action for Childhood Arrivals program that allows children of undocumented immigrants to live and work in the U.S. legally. She said the prospect of saving for a down payment on a home also seemed daunting. Saving for a downpayment can be difficult for many homebuyers, but the wage gap exacerbates the issue for Latinos. The median income of a Hispanic household was $55,321 in 2020 versus $67,521 for all races, according to the 2020 Census. That leaves a typical Hispanic household well short of the $68,000 annual income needed to afford the median-priced U.S. home, according to NAHREP. The pandemic-related rapid increase of real estate prices along with soaring mortgage rates in recent months has only made matters worse, pushing many first-time buyers out of the market. On top of that, the chronically low number of affordable homes for sale has hit Hispanic communities especially hard. Hispanic buyers also may have lower credit scores, sometimes as a result of preferring to use cash for purchases, according to Freddie Mac. Cultural and language barriers in navigating the homebuying process may also discourage Hispanic homebuyers, Freddie Mac researchers said. Limited bilingual resources can make it harder for the Latino community to learn more about the homebuying process or begin shopping around for homes. Because of these obstacles to getting a mortgage, Hispanic buyers are more likely than any other group to use riskier, non-mortgage forms of financing for home purchases, according to research by the Pew Charitable Trusts. Those include lease-purchase agreements, seller-financed mortgages, and other types of loans that don’t come with all the protections of a mortgage. It’s much easier to lose your home if you fall behind on payments with these loans since the lender doesn’t have to go through the mortgage foreclosure process, which includes protections for borrowers. On top of that, non-mortgage loans (which may also be referred to as alternative home loans) don’t always result in the borrower’s clear ownership of the property. However, there are resources available to help Hispanic first-time buyers get mortgages and become homeowners.
Where to Get Help
Last year, Ramirez, who now works as an executive assistant in the Illinois governor’s office, finally bought her own home. The key, she said, was working with a real estate agent who helped her understand the process, and helped her apply for a Federal Housing Administration loan—a type of federally-backed loan with down payments as low as 3.5%, versus the traditional 20% down payment for a conventional loan. Ramirez was able to buy the house with a down payment of $12,000. Perez said Hispanic buyers can contact NAHREP to help find an agent who can guide them through the homebuying process, including working to improve their credit scores if necessary. “The reality is that many of these obstacles are easily overcome when you have a knowledgeable professional by your side,” Perez said. “Not having credit is an issue we see all of the time, but there are simple ways by which one can boost their credit in a matter of weeks.” Gamez was able to get even more help. She worked with the Neighborhood Assistance Corporation of America, a nonprofit group that promotes home ownership, to buy her home only paying a small appraisal fee out of pocket. UnidosUS also offers assistance through its Wealth and Housing Alliance program, which provides counseling and education in English and Spanish. In addition to those, there are multiple government and nonprofit downpayment assistance programs to help first-time buyers get over the hurdle of making a large lump sum payment at closing. For buyers like Ramirez, the rewards of homebuying have been worth the investment. “I feel great,” she said. “I feel accomplished. I feel at peace. I feel like we’ve turned this house into a home, and it feels just amazing to be able to say, ‘I’m headed home.’” Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.
