Buying a home in Maine is hard enough, but for people whose parents never owned a home, it can be even more challenging.
Homeownership is one of the easiest ways to build generational wealth. The median wealth gap between homeowners and renters was nearly $390,000 in 2022, which is around the average Maine home value. That gap persists over generations: the children of homeowners are 7 to 8 percent more likely to own a home than the children of renters, controlling for all other factors including parental income, according to a 2018 study by the Urban Institute.
The median wealth of a renting family is $10,400, and for a homeowning family, it is $396,200, said Scott Thistle, director of communication for MaineHousing, the state housing authority.
“The need for a program, trying to give first generation homebuyers a chance by giving them a little assistance with a down payment, was self-evident,” Thistle said.
Numerous first-generation homeowners are now getting that chance, thanks to a MaineHousing program rolled out last year. The program –– officially permanent, rather than a pilot –– has already offered financial literacy classes, up to $10,000 in down payment assistance and low fixed interest rates to 123 first-generation households since April 2023, Thistle said.
“[It’s] allowed me to buy my first home years before I would have been able to otherwise,” Shannon Cooper, a program participant who spent part of her childhood in foster care, wrote in a statement shared by MaineHousing. “My biggest hurdle was coming up with enough money for a down payment. …It is difficult to find a seller willing to accept [a USDA or FHA loan] when they have so many conventional or cash offers to choose from.”
In Maine, median home sales prices have increased by nearly 68 percent since May 2019, according to Redfin. Meanwhile, the share of homes that are vacant and available in Maine fell below 2 percent in 2022, per state data.
Some young adults have been able to save by living at home, choosing not to take part in this inflated market. Many often turn to kinship networks to finance down payments on their first “starter” home, as prices for those continue to climb.
But those without that safety net who are trying to break into homeownership for the first time in their family’s history are not having as much luck.
“It takes a certain amount of resilience, effort, privilege and luck to reach enough financial stability to qualify for a mortgage in the first place,” Cooper wrote. “I want [my kids] to have memories of growing up in a home instead of an apartment that is too small and facing inevitable rent increases.”
MaineHousing’s program is open to anyone looking to buy a Maine home who makes less than 120 percent of their area’s median income, who never lived in a home owned by their parents or legal guardian, or who spent any time living in foster care, like Cooper. The program is not financed by taxpayer dollars, Thistle said, but by bond sales made by MaineHousing.
There’s a recognition in the program, too, that there’s more than economic realities holding first-generation homebuyers back from purchasing a home. Gaps in knowledge about how to go about the homebuying process need closing, too.
Because of this, program participants must take two classes –– financial literacy and homebuyer education –– before benefiting from the loan program. The classes are taught in five locations across Maine and virtually, too. They instruct people on the basics that many who grow up in homeowning families take for granted, from troubleshooting plumbing problems to repairing drywall. The finance classes then take these households through how to establish a bank account, how to build credit and how to search for a home.
The results have been transformative, said Jessica Gurney, MaineHousing’s education and outreach coordinator.
“Without the grant money and without the interest rate, in this market a lot of [program participants] would have never been able to purchase a home,” Gurney said. “I feel like the program has given a lot of people hope.”
