Until a few months ago, Justin Murchison had no plans to buy a house—soon, that is. Like many millennials, the 29-year-old was renting a house in Aurora with a few roommates. As a single black man who “doesn’t make close to a million dollars,” as Murchison puts it, buying a house seemed inconceivable. Until the Dearfield Fund for Black Wealth intervened.
Founded by Gary Community Enterprisesa philanthropic organization based in Denver, the Dearfield Fund aims to help black families and individuals buy a home in Denver frenetic real estate market. The fund, which launched in September 2021, has already helped more than 40 homebuyers buy a home by offering each up to $40,000 in down payment assistance. Gary Community Ventures aims to serve more than 450 homebuyers over the next three to five years and has a 10-year goal to serve 1,000 Black families in Denver.
The Dearfield Fund could be a step in the right direction after years of systemic racism in the real estate landscape. According to US census, only 43% of black Americans owned a home at the end of 2021, compared to 74% of white Americans. This discrepancy, according to a study 2021 of the Brookings Institution, has its roots in white supremacist practices: black people are more likely to experience discriminatory loan practices, for example, and homes in predominantly black neighborhoods are more likely to be devalued.
Individual prejudices also play a role. In 2020, a denver biracial couple says they were discriminated against when an appraisal company appraised their home. When Lorenzo Mitchell, a black man, was home, the company valued the house at $405,000. When his wife, who is white, stayed home, another appraisal company appraised their home at $550,000.
Often, however, mere access to resources prevents potential buyers from succeeding in the market. Monica Askew, a Denver-based real estate agent brokersays many black families are able to get a loan and pay their mortgage, but struggle to find the funds for a down payment, whether because of the racial wealth gap or exorbitant rent prices .
“What I often see now, and especially for people in my community, is that they don’t have any upfront money,” says Askew, who is black. “Sometimes they only need a few thousand dollars to secure a house.”
This is where the Dearfield Fund comes in. Prospective homeowners can apply for up to $40,000 in down payment assistance, provided they meet the criteria: they must be first-time homebuyers, take a homeownership course through through their lenders, qualify for a conventional mortgage with FirstBank or Elevations Credit Union, and have saved at least three percent of the value of the home in the range they are looking to buy. In addition, their income must be less than 140% of the Denver median income (so, since the city’s median income is $43,000 for an individual, the applicant must be earning less than $103,000, or 140%). Gary Community Ventures does not decide how much assistance each family receives. Each eligible family will receive the amount of assistance they requested, up to a maximum of $40,000.
The management of Gary Community Ventures believes that the initial injection of cash will ensure that eligible families are not prevented from owning a home by the racial wealth gap and then forced into an unpleasant cycle. “We’ve listened to many black families who have said that one of the biggest things that separates them from building wealth is owning a home,” says Santosh Ramdoss, vice president of impact investing at Gary Community Ventures. .
The idea that owning a home can help build wealth is not new. In fact, the Gary Community Venture fund takes its name from the historic town of Cherfield, Colorado, founded by Denver businessman Oliver Toussaint Jackson. In 1910, Jackson officially launched the community with the goal of encouraging black and African American families to own property and build wealth.
Jackson had the right idea: Research showed that owning a home is a crucial step in building wealth, especially for low-income households. In Colorado, people of color are poorer overall than white residents. A study 2019 by the Bell Policy Center, a Denver-based nonprofit, shows that in 2017, about 25% of black Coloradans experienced poverty, compared to 10% of white Coloradans.
Living below the poverty line obviously makes it difficult to make a down payment. It’s a particularly big hurdle in Denver’s real estate market, where the wealthiest buyers are able to put down substantial sums of money to secure a home, essentially driving out buyers who don’t have the cash.
Gary Community Ventures heard as much during a series of formal listening groups with several black families. There, several people mentioned that making a down payment is the biggest hurdle to buying a home. Gary Community Ventures further convened an advisory committee of local black leaders to guide them through the process of creating and launching the fund.
The Dearfield Fund is not a grant program. Instead, it provides down payment assistance that must be repaid (along with five percent of the home’s appraised value) over 15 years, or after a beneficiary sells or refinances their home.—it doesn’t matter which comes first. If families need more time, they can request an extension. Ramdoss thinks that if a family owns a house for 15 years, they can either sell the house at a profit or build up an estate, save money and possibly repay the assistance.
Askew, the Denver realtor, believes that 15 years is more than enough time to save money to repay assistance, especially if a family no longer has to worry about rent prices.
“A lot of down payment assistance programs work this way,” Askew says. “I found this to be beneficial for most homebuyers. So many people I work with are fully able to qualify for a mortgage, but they just don’t have that money saved up. I honestly think the Dearfield Fund seems like a great opportunity for buyers of color to start building that wealth.
While a similar plan at the federal level has received some criticismincluding that it could help people get a home they ultimately can’t afford the mortgage on, Murchison says the Dearfield Fund has put him in a good position.
“I find it quite feasible to repay [the money], especially with the way Denver’s housing market is,” says Murchison. “This fund helps me create wealth. If I eventually decide to sell my house, I will have more than enough to pay off the down payment. Plus, not paying rent just means more money that can go towards my savings.
Today, Murchison owns the same house he rented. According to him, it was fate that he came across the fund. “I can’t say enough good things about the Dearfield Fund,” says Murchison. “They helped me accomplish something I never thought I would do.”