MaKayla Jackson was paying the rent on time every month, but building up enough savings to buy a home seemed years away. 

The 20-year-old Detroit bus operator put aside $3,000 for a down payment over a few months. She wanted a permanent home for her one-year-old son to grow up in and someday inherit. Thanks to a $25,000 bost from the city of Detroit, they moved into a three-bedroom house in the Harmony Village neighborhood last month.

“This felt like home when I walked through the door,” Jackson said as her son slid across the hardwood floor of their living room in tractor truck slippers.

Detroit spent $8 million so far to help renters like Jackson become homeowners under a federally-funded program launched this year. The Down Payment Assistance program offers up to $25,000 in cash grants to help buyers make a down-payment, cover closing costs or deposit into an escrow fund for property taxes and other costs.

As of Nov. 2, there were 325 applicants who received approval for down payment grants. City data shows 241 have closed on a home, another 84 are pending and roughly 100 others are having their applications reviewed. City officials expect that the grants will help 480 renter households become homeowners. 

The program, administered by the Detroit Housing and Revitalization Department and National Faith Homebuyers, a Detroit-based nonprofit, started in March with $6 million in American Rescue Plan Act funds. Federal funding was later doubled, for a total of $12.25 million. 

“I don’t know if when we started the program we understood how dramatic that impact was going to be for people, but that’s something we’re seeing and why we added additional money,” said Julie Schneider, director of the city’s Housing and Revitalization Department. 

The program was intended to help renters who can afford a mortgage but can’t save enough for a down payment. Three-quarters of those who were approved had $6,000 or less in savings. 

“The number one thing is they don’t have enough cash to close,” Schneider said. “They just don’t have the money to get in the door.” 

David Palmer, a real estate agent and Detroit resident, said the funding helps people gather enough capital to become a homebuyer, but they’re likely to run into challenges finding quality housing. 

“If you look at the bulk of the city’s single-family housing stock, it’s all built before 1950,” Palmer said. “The due diligence that’s required of a realtor to help their client who’s likely a first-time, first generation-homebuyer go through that stuff, it gets challenging. You’re talking about $800 to $1,500 worth of inspections to figure out what it is that you’re buying. (Buyers) have little, if any, leverage against the seller in this marketplace to do something about anything major that’s discovered.”

Jackson said she looked at around 20 houses before settling on the Harmony Village home, but many of them needed significant repairs. But Schneider said the financial assistance helps homebuyers afford properties that are in better condition. 

Schneider said it’s more difficult to obtain a mortgage for homes with repair needs. The U.S. Department of Housing and Urban Development provides financing for homebuyers that are looking at a costly rehabilitation. If mortgage options aren’t available, residents would be forced to buy using cash savings. 

”That’s not within reach for a lot of people,” she said. 

Applicants for the Down Payment Assistance program must meet income thresholds, have lived in Detroit for at least a year and complete a homebuyer education course. To qualify, a single person must earn below $43,740, while a two-person household must earn less than $59,160. A family of three must earn below $74,580. 

The program is also available for anyone who lost a Detroit home to property tax foreclosure between 2010 and 2016 – three of the grants were approved for households that qualify. 

Detroit residents paid inflated property taxes based on outdated assessments that did not reflect declining property values in the years following the Great Recession. This led to homeowners paying more in property taxes than their properties were worth. The Detroit News found the city overtaxed homeowners by at least $600 million.

Palmer co-authored a guide to down payment assistance programs with the University of Michigan Center for Equitable Family & Community Well-Being which shows the city’s down payment program can be stacked with funding from the Michigan State Housing Development Authority, and other sources.

He said roughly two-thirds of Detroit has virtually no mortgage activity, so a potential measure of the program’s success would be to look at where the homes are being purchased. 

Detroit data shows half of homes (170) purchased using the assistance are in City Council districts 1 and 2 on the northwest side. Many neighborhoods with a high number of mortgage denials are within those council districts. That suggests the down payment assistance is helping to diversify the mortgage landscape, Palmer said. 

“This is the way that we build a healthy mortgage ecosystem,” he said. 

Grant recipients in the program received $24,455 on average, according to the city. The total amount of assistance cannot exceed 50 percent of the purchase price. Roughly $30 million in mortgage loans were approved for residents who received funding.

City data provided to BridgeDetroit shows 93 percent of applicants that received down payment grants under the program are Black, with an average income of $47,229. The median income for Detroit households is $34,762, according to the U.S. Census Bureau. 

Homes purchased through the program cost $117,211 on average and the average monthly mortgage payment is $903. 

Applicants aren’t eligible if they’ve owned a home in the last three years. Recipients must stay in their home for three years after the grant is awarded or they have to repay the city, according to program rules.  

Thirteen lenders are partnering with Detroit to provide mortgages for the program: Bank of America, Chase, CIBC, Citizens, Fifth Third Bank, First Independence Bank, First Merchants Bank, Flagstar Bank, Huntington Bank, Independent Bank, Liberty Bank, PNC Bank and Rocket Mortgage.

Once Detroiters have a lender and a prospective home they want, they can apply at www.detroitdpa.org or by calling (313) 244-0274.