If recently-introduced first-time homebuyer legislation were to be enacted as written, about 4.37 million people – roughly 10% of the nation’s renters – could be eligible for up to $25,000 in downpayment assistance.

Advocates of the policy say the program’s thoughtful targeting would allow it to reach those who need it the most, while industry experts told HousingWire that a complex, heavily means-tested program could create compliance pitfalls.

A study conducted by the Urban Institute found that out of the potential eligible participants, 1.6 million are Black, 1.2 million are Hispanic and 1.3 million are white. In its analysis, the Washington, D.C.-based think tank defined eligible participants as renters who have not owned a home for three years, and whose parents have not owned a home for three years.

The Downpayment Toward Equity Act would allow first-time homebuyers, defined as those who have not owned a home in the prior three years — who are also first-generation homebuyers — to receive up to $25,000 in down payment assistance at closing. Eligible participants would receive a baseline of $20,000 toward closing, and those in a “socially and economically disadvantaged” group would receive $25,000. The program also limits the assistance to those who earn less than 120% of the area median income.

Compared to a proposal that President Biden floated during last year’s campaign, which would have offered a tax credit for first-time homebuyers of up to $15,000, the legislative proposal is quite narrow. The limited scope did not escape notice by Bose George, an analyst at Keefe, Bruyette and Woods, who called the first-time homebuyer program “fairly narrow and targeted.”