Earlier this month, the city of Richmond sent an internal email spotlighting a federally funded city program that gives government employees $25,000 to help buy a home for the first time.

“Don’t Miss Out,” the email said.

If officials can’t find more takers, it’s the city itself that could be missing out.

Only three employees have bought a home so far under the program, using only a small fraction of the $1.3 million allocated to it. Because the initiative is funded with federal dollars from the COVID-era American Rescue Plan Act, the city is under a deadline to spend the money.

If the funding isn’t used by the end of 2026, Richmond will have to give it back to the federal government, according to officials.

“We are going to do our hardest to make sure that does not happen,” Meghan Brown, the city’s director of budget and strategic planning, told a City Council committee on Nov. 19.

Because of the new sense of urgency around using the money, officials are exploring whether it’s possible to expand the program to a larger pool of potential applicants, possibly by opening it up to people who don’t work for the city.

Richmond received nearly $155 million in ARPA funding, Brown said, and the vast majority of it is on track to be spent by the end-of-2026 deadline. The Homebuyer Assistance Program is a clear exception, with less than 10% of the money spent so far, according to a city presentation.

The challenge for the homebuying program, according to officials, has been identifying city employees with incomes low enough to qualify for the help who are also financially stable enough they can afford homeownership in an increasingly expensive city.

In response to Brown’s presentation, Councilor Ellen Robertson (6th District) said the program’s sluggish launch highlights the need for more affordable housing in the city.

“When our own employees can’t afford to buy a home, that’s really critical,” Robertson said, adding that the Richmond housing market seems to have pushed homeownership out of reach even for city employees making a decent salary of $75,000.

Under the program’s eligibility rules, recipients must be a full-time city employee with at least a year of service with a gross household income of less than $120,000 for a two-person household or $138,000 for bigger households. Recipients also cannot have owned or purchased a home within the last three years. The maximum sales price allowed is $550,000.

Brown pointed to other limiting criteria, such as a minimum credit score of at least 620 and at least $1,000 in the bank to put toward the home purchase.

The program is being administered through Housing Opportunities Made Equal, or HOME, a nonprofit that focuses on fair housing access.

Tom Okuda Fitzpatrick, HOME’s executive director, said that even though only three families have closed on a house, dozens more have benefitted from the program through counseling and education about what goes into buying a house.

“Our mission here isn’t only to offer down payment assistance, it's to ensure families are truly ready for long-term, stable homeownership,” Fitzpatrick said. “As a result, we measure success not just in closings, but in the number of families that are better informed, more financially prepared, and working toward stability, whether that’s this year or down the road.”

Of the 108 people who have applied for the assistance, Fitzpatrick said, 66 were accepted and 44 attended education sessions.

“Those who were not accepted typically had a credit score below 600, owed money to collections, or had a recent bankruptcy that would prevent them from qualifying for a mortgage,” he said.

Of the 44 who participated in classes, he added, 19 submitted follow-up documentation and completed housing counseling. 

Because it’s a Richmond program, participants have to purchase a home within the city limits. And because it involves federal dollars, the home purchases are limited to lower-income areas of the city designated as qualified census tracts by the federal Department of Housing and Urban Development.

Five people had funding set aside for a home purchase, according to HOME, but one ultimately purchased a house outside the designated area using a different city-funded assistance program. Another changed plans due to last-minute issues with the to-be-purchased house.

The counseling sessions, Fitzpatrick said, are meant to help would-be participants understand the financial implications of homeownership and give HOME a better sense of whether their household budget could comfortably absorb the cost.

“Our housing counselors work closely with clients on their household budgets to make sure that after all monthly expenses — mortgage payments, car payments, childcare, and other recurring costs — they still have at least $150 remaining to cover unexpected needs,” Fitzpatrick said. “The last thing we want is to help someone achieve their dream of homeownership only to see them struggle or face foreclosure because the monthly costs aren’t sustainable.”

City officials said they’re going to review the issue to get a better sense of how the program might be expanded under ARPA rules and the terms of the contract with HOME.

Council members told city staff they’d like an update on the plan for the money sooner rather than later.

“There are folks that are in desperate need of a down payment and closing costs for homeownership,” said Robertson. “But they aren’t city employees.”

Contact Reporter Graham Moomaw at gmoomaw@richmonder.org